Reference no: EM132797030

The following transactions for the long term fair value through other comprehensive income investment of Karen Company, took place in 2018:

1. Feb 10 - Karen Company acquired 10,000 shares of Klaire Company ordinary shares at Php 88/share
2. March 31 - Klaire Company issued a 10% stock dividend to its ordinary shareholders
3. June 30 - Klaire Company issued rights to its ordinary shareholders for the acquisition of one additional share at Php 90 for every 5 shares held. The ordinary share was trading ex-right at Php 114 and the rights had a market value of Php 6/right.
4. July 13 - Karen Company exercised 10,000 rights to acquire new shares
5. July 20 - The remaining rights were sold for Php 5.50 each
6. Oct 12 - Karen Company sold 4,000 shares of Klaire Company ordinary share for Php 440,000. The shares were sold specifically identified as being from those acquired on February 10.

Required: Based on the above facts, answer the following:

Problem 1. The cost of stock rights to be recorded on June 30, 2018

Problem 2. The cost of the investment acquired in July 13, 2018

Problem 3. Gain or loss on sale of the remaining rights sold on July 20, 2018

Problem 4. The realized gain or loss on the sale of the 4,000 shares sold on October 12, 2018

Problem 5. The adjusted balance of the investment account for the year ended December 31, 2018