Prepare entries for years 1 and 2 in the books

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Reference no: EM132825820

Question

Exercise 2 (FVOCI): Victory Company completed the following transactions relating to investment in whirlpool corporation ordinary shares. Victory did not intend to hold the securities for immediate trading and exercised its option to designate them at fair value through other comprehensive income.

Year 1
(a) Purchased 1,000 shares (5% interest in voting shares) at P150 per share, plus transaction costs of P3,750.
(b) At year-end, the Whirlpool Corporation ordinary shares had fair value of P180 per share.

Year 2
(a) Sold 500 of Whirlpool Corporation ordinary shares at P190 per share, incurring P1,000 transaction costs on the sale. (b) At the year-end, the fair value of each share was P192.
Victory Company has the policy of transferring the equity account to retained earnings at the date the equity investment is derecognized.

REQUIRED: Prepare entries for years 1 and 2 in the books of Victory Company.

Reference no: EM132825820

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