Reference no: EM133139799

Questions -

Q1. At the start of the current year, Violet Company held 30% of ABC Company's 150,000 outstanding shares and 2% of DEF Company's 500,000 outstanding shares. During the year, Violet received a P25,000 cash dividend from ABC and a 5% share dividend when the stock of ABC was selling at P40 per share. DEF declared a P15 per share dividend during the year but subsequently issued 500 shares to Violet in lieu of the cash dividends. At the end of the year, Violet received P50,000 as liquidating dividends from DEF Company. How much will Violet report as dividend income for the current year?

Q2. At the beginning of 2021, Gala company purchased equity securities to held for trading for P5,000,000. The entity also paid commission, taxes and other transaction costs amounting to P200,000. The securities had a market value of P5,500,000 at year-end. No securities were sold during the year. In the year 2022, 60% of the investments were sold. Proceeds from the sale amounted to P3,450,000 which is net of transaction costs amounting to P125,000. On December 31, 2022, the fair value of the investment is 40% more than the carrying amount at the end of 2021. What total gain/loss on trading securities should be reported in the income statement for 2022?