Problem 1

Investment Securities as of December 31, 2018

Shares/Bonds Cost Market

Trading Securities
Anthony, Inc. 9,600 144,000 184,000
Belanger, Inc. 16,000 432,000 288,000
10% 200,000 bonds (semi-annual, Jan. 1 & Jul.1) 158,400 163,440

Investment at FVTOCI
Raneses, Inc. 32,000 1,376,000 1,440,000
Antonette, Inc. 240,000 6,240,000 5,840,000
Elcana, Inc. 80,000 960,000 1,280,000

Amortized Cost Cost Carrying Amount

12%, 2,000,000 bonds (annual, Dec. 31) 1,900,000 1,926,000

During 2019, the following transactions occurred:

January 1 Received interest on the Alejandra, Inc., bonds

Cash 10,000
Interest Receivable 10,000

March 1 Sold 8,000 shares of Belanger, Inc., shares for P 152,000

Cash 152,000
Trading Securities - Belanger, Inc. 144,000
Gain on sale of Trading Securities 8,000

May 15 Sold 3,200 shares of Elcana, Inc., for P 15 per share

Cash 48,000
Retained Earnings 3,200
FVTOCI Securities 51,200

Fair Value - Elcana, Inc. 1,280,000

Cost - Elcana, Inc. 960,000
Unrealized Gain - OCI 320,000
UG - OCI portion of 3,200 shares 12,800
 Unrealized Gain - OCI 12,800
Retained Earnings 12,800

July 1 Received interest of the Alejandara, Inc. Bonds

Cash 10,000
Interest Income 10,000

December 31 Received interest on the Lester Ryan Company Bonds

Cash 240,000
Interest Income 240,000

Face Value of Lester Ryan Bonds 2,000,000

Cost of Lester Ryan Bonds 1,900,000
Discount on Bonds Payable 100,000

Effective Interest Method

Date Interest Income Interest Rec. Amortization Carrying Amount
1/2/2018 14% 1,900,000
12/31/2018 266,000 240,000 26,000 1,926,000
12/31/2019 269,640 240,000 29,640 1,955,640

Investment at Amortized Cost 29,640

Interest Income 29,640

FVTOCI Securities 2,020,000

Investment at Amortized Cost 1,955,640
Gain on Reclassification of Invest. 64,360

The market values of the shares and the bonds on December 31, 2019, are as follows:

Trading MV MV - 12/31/19 MV - 12/31/18 Unrealized Gain (Loss)

Anthony, Inc. 22 per share 211,200 184,000 27,200
Belanger, Inc. 15 per share 120,000 144,000 (24,000)
Alejandra 151,200 163,440 (12,240)
(9,040)

Unrealized Loss - Profit or Loss 9,040

Trading Securities 9,040

OCI Securities MV MV - 12/31/19 MV - 12/31/18 Unrealized Gain (Loss)

Raneses, Inc. 42 per share 1,344,000 1,440,000 (96,000)
Antonette, Inc. 28 per share 6,720,000 5,840,000 880,000
Elcana, Inc. 18 per share 1,382,400 1,228,800 153,600
Lester Ryan Company 2,020,000 - -

Raneses, Inc.
Unrealized Gain - OCI 64,000
Unrealized Loss - OCI 32,000
FVTOCI Securities 96,000

Antonette, Inc. & Elcana, Inc.

FVTOCI Securities 1,033,600
Unrealized Gain - OCI 1,033,600

To record accrued interest on Alejandra Bonds

Interest Receivable 10,000
Interest Income 10,000

1. Gain or loss on sale of 8,000 Belanger, Inc. shares on March 1, 2019?

2. Realized gain or loss on sale of 3,200 Elcana, Inc. shares on May 15, 2019?
3. Total interest income for the year 2019?
4. The amount that should be reported as unrealized gain in the statement of changes in
equity regarding the transfer of Lester Ryan Bonds to investment at FVTOCI?
5. Carrying Value Trading Securities
OCI Securities
ng Amount
ng Amount

ized Gain (Loss)

ized Gain (Loss)

8,000 gain
Zero
289,640

Zero
482,400
11,466,400