Reference no: EM132966818
Questions -
Q1. Temporal Company owned 50,000 ordinary shares held for trading. These 50,000 shares were purchased for P120 per share. During the year, the investee distributed 50,000 stock rights to the investor. The investor was entitled to buy one new share for P90 cash and two of these rights. Each share had a market value of P130 and each right had a market value of P20 on the date of issue. What total cost should be recorded for the new shares that are acquired by exercising the stock rights?
Q2. On January 1, 2014, Hostile Company purchased 4,000 shares of another entity at P100 per share. Transactions costs amounted to P12,000. The investment is measured at fair value through other comprehensive income. A P5 dividend per share had been declared on December 15, 2013, to be paid on March 31, 2014 to shareholders of record on January 31, 2014. No other transactions occurred in 2014 affecting the investment. What is the initial measurement of the investment on January 1, 2014?
Q3. Justice Company purchased 50,000 shares on January 15 representing 5% ownership interest to be held for trading. The entity received a stock dividend of 20% on March 31 when the market price of the share is P40. The investee paid a cash dividend of P5 per share on December 15. What amount should be reported as dividend income for the current year?
Q4. On January 1, 2015 Sound Company purchased 100,000 ordinary shares at P80 per share to be classified as nontrading through other comprehensive income. On September 30, 2015, the entity received 100,000 stock rights to purchase an additional 100,000 shares at P90 per share. The stock rights had an expiration date of February 1, 2016. On September 30, 2015, each share had a market value of P114 and the stock right had a market value of P6. What amount should be reported on September 30, 2015 as an investment in stock rights?
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