Reference no: EM132858918
Questions-
Q1. On January 1, 2011, SMC Incorporated acquired 10,000 common stocks of BPI at a price of P20 per share. SMC Incorporated incurred and paid P50,000 transaction costs in relation to the acquisition of the stocks. SMC irrevocably designated the investment at fair value through other comprehensive income. On July 1, 2011, BPI declared 20% same class share dividends to its common stockholders when the quoted price of stocks is P30 per share with P10 par value per share. On October 1, 2011, BPI declared and paid P1 per share cash dividend to its common stockholders. On December 31, 2011, the common stocks of BPI are quoted at P15 per share. On July 1, 2012, SMC sold 3,000 common stocks of BPI at P18 per share and incurred cost ofdisposal of P1,500. What is the dividend income to be recognized by SMC Incorporated for the year ended December 31, 2011 in its profit or loss?
a. P10,000
b. P12,000
c. P72,000
d. P30,000
Q2. Using the same data in number 1, what is the unrealized holding gain or loss to be presented in OCI of SCI for the year ended December 31, 2011?
a. (P70,000) loss
b. (P50,000) loss
c. (P100,000) loss
d. (P120,000) loss
Q3. Using the same data in number 1, what is the net credit or debit to retained earnings on July 1, 2012 as a result of disposal of investment in common stocks?
a. (P70,000) net debit
b. (P20,000) net debit
c. (P8,500) net debit
d. (P10,000) net debit
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