Reference no: EM132914064

During 2009, Pampanga Company purchased 9,000 ordinary shares of Angeles Company for P16 per share, 6,000 ordinary shares of Apalit Company for P33 per share and P120,000 of treasury notes at 101. These investments are intended to be held as ready sources of cash and are classified as held for trading.

Also in 2009, Pampanga purchased 10,500 ordinary shares of Arayat Company for P29 per share. The securities are classified as AFS.

During 2009, Pampanga received the following interest and dividend payment on its investments:

Angeles Company            P1 per share dividend
Apalit Company               P3 per share dividend
Arayat Company             P2 per share dividend
Treasury Notes               6% annual interest earned for 6 months

Fair values of the securities at December 31, 2009, were as follows:

Angeles Company P20 per share
Apalit Company P22 per share
Arayat Company P26 per share
Treasury notes 102

On March 23, 2010, the 6,000 ordinary shares of Apalit were sold for P17 per share. On June 30, 2010, the treasury notes were sold 100.5 plus accrued interest.

Fair values of remaining securities at December 31, 2010, are as follows:

Angeles Company P20 per share
Arayat Company P33 per share

Requirement: Create a working paper to document your audit. Make sure that the following questions are answered by your audit working paper:

Problem 1. Total dividend income in 2009?

Problem 2. Carrying amount of Trading Securities as of December 31, 2009?

Problem 3. Unrealized loss to be recognized in 2009 profit or loss?

Problem 4. Total realized loss on sale of securities in 2010?

Problem 5. Net unrealized gain in accumulated other comprehensive income in equity as of December 31, 2010?