Reference no: EM132733149
Sabbath Inc. made the following purchases of securities during 2020
a. On January 15, purchased 50,000 shares of Goliath Company ordinary shares at P33.50 per share plus broker's commission of P3,960.
b. On July 1, purchased 30,000 shares of Bestfoods Company preference shares at P26.50 per share plus broker's commission of P9,850 and transfer taxes of P950.
c. Purchased for a lump sum price of P120,000 the following shares of Donut Company:
Market Price at
No. of shares Purchase Date
Ordinary shares 150 P100
Preference shares 300 150
In addition, transfer taxes and other costs related to the acquisition amounting to P2,500 were paid
d. Purchased 8,000 shares of Moon Corporation P50 par ordinary shares in exchange for a building. The building had a cost of P4,000,000 and accumulated depreciation of P2,720,000. the Moon Corporation shares are actively traded on a stock exchange and are currently selling at P200.
Instruction:
Problem 1: Determine the amount at which the investment in each of the above acquisitions be initially recognized, assuming that the shares are classified as
a. available for sale securities
b. trading securities
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