Jean Company and its subsidiaries provided the following owned by the group.

Land held for undetermined future use 1,000,000

Vacant building to be leased out under an operating lease 2,000,000
Property held for use in production 4,000,000
Property held by a subsidiary, a real estate firm in the ordinary course of business 3,000,000
Building owned by subsidiary and for which the subsidiary provides security and
maintenance services to the lessees 2,500,000
Land leased to subsidiary under an operating lease 1,500,000
Equipment leased to an unrelated party under an operating lease 500,000
Building under construction for use as investment property 3,500,000
1. In the consolidated statement of financial position of the parent and its subsidiaries, what total amount should be reported as
investment property?
9,000,000

Princess Company purchased an investment property on January 1, 2011 at a cost of P2,200,000. The property had a useful life of 40
years and on December 31, 2013 had a fair value of P3,000,000. On December 31, 2013, the property was sold for net proceeds of
P2,900,000. The entity used the cost model to account for its investment property.
2. What is the gain or loss to be recognized for 2013 regarding the disposal of the property?
865,000 gain

Adrienne Company owned three investment properties. Details of the properties are as follows:
Initial cost FV 12/31/2013 FV 12/31/14
Property 1 2,700,000 3,200,000 3,500,000
Property 2 3,450,000 3,000,000 2,800,000
Property 3 3,300,000 3,900,000 3,400,000
Each party had an estimated useful life of 50 years. The policy is to use the fair value model for investment property.
3. What is the gain or loss to be recognized for the year ended December 31, 2014?
400,000 loss

The following information is available concerning the San Carlos corporation’s sinking fund transactions in 2010.
Jan. 1 Established a sinking fund to retire an outstanding bond issue by contributing P4,250,000
Jan. 15 Purchased securities for P4,000,000
Jul. 30 Sold securities originally costing P480,000 for P450,000
Dec. 31 Collected dividends and interest on the remaining securities in the amount of P490,000;
The securities had a market value of P3,600,000 at this time
4. The sinking fund balance on December 31, 2010 is
4790000

On January 1, 2010, San Fernando Corporation created a special building fund by depositing a single sum of P200,000 with an
independent trustee. The purpose of the fund is to provide resources to build an addition to the older office building during the latter part of
2014. The company anticipates a total construction cost of P1,000,000 and completion by January 1, 2015. The company plans to make
equal annual deposit from December 31, 2010 through 2014, to accumulate the P1,000,000. The independent trustee will increase the
fund each December 31 at an interest rate of 10%. The accounting periods of the company and the fund ends December 31.
5. How much is the annual deposit to the fund? (Round off present value factors to four decimal places)
111038

Urdaneta took out a P10,000,000 insurance policy on the life of its president on January 2, 2008. The company’s accounting period is the
calendar year. The annual premium on the policy is P160,000. Data regarding dividends and cash surrender value are given below:
2010 2011
Dividends received 10,000 12,000
Cash surrender value 84,000 ?
Life insurance expense ? 138,000
6. The cash surrender value at December 31, 2011 is
94,000
7. From the preceding number: Assuming the president dies on July 1, 2011 and the face of the policy is collected on July 31, 2011, the
gain on life insurance settlement is
9831000

Modern Company has a property that is being held for rental with a carrying value of P40,000,000. On December 31, 2011, Modern
Company reclassified the investment to held-for- sale. The fair value of the property at the time of reclassification is P38,000,000 and
cost to sell is estimated at 2% of the fair value.
8. What amount of loss should Modern Company recognize at the time of transfer?
2760000

Dagupan, inc. owns a building purchased on January 1, 2006 for P100 million. The building was used as the company’s head office. The
building has an estimated useful life of 25 years. In 2010, the company transferred its head office and decided to lease out the old building.
Tenants began occupying the old building by the end of 2010. On December 31, 2010, the company reclassified the building as an
investment property to be carried at fair value. The fair value on the date of reclassification was P85 million.
9. How much should be recognized in 2010 profit or loss as a result of the transfer from owner-occupied to investment property?
0

For the next two numbers

On January 1, 2010, Cauayan Corporation purchased a 5 year bonds that has a principal amount of P1,000,000 and pays annually fixed
interest rate of 12% per year. Cauayan Corporation classified the bond as at fair value through OCI. Current market rate for similar 5 year
bond is also 12%.
Because the interest rate is fixed, Cauayan Corporation is exposed to the risk of declines in fair value due to increases in market interest
rates, Cauayan enters into an interest rate swap on January 1, 2010 tpo exchange the fixed interest payment it receives on the bond for
floating interest payments. Cauayan designated and documented the swap as hedging instrument of the bond.
On December 31, 2010, market interest rate is 14%.
10. The amount to be recognized in profit or loss due to change in fair value of the investment is
58,300
11. The amount to be recognized as derivative asset on December 31, 2010 is
58,000

On July 1, 2020, B Company purchased P1,000,000 face value 8% bonds for P910,000 plus accrued interest to yield 10%. The bonds
mature on January 1, 2025, pay interest annually on January 1, and are classified as trading securities. On December 31, 2020, the bonds
had a market value of P945,000. On February 13, 2021, the entity sold the bonds for P920,000.
12. On December 31, 2020, what amount should be reported for short-term investments in trading debt securities?
945,000

On January 1, 2020, A Company purchased serial bonds with face value of P3,000,000 and stated 12% interest payable annually every
December 31. The bonds are to be held as financial asset at amortized cost with a 10% effective yield. The bonds mature at an annual
installment of P1,000,000 every December 31. The rounded present value of 1 at 10% for:
One period 0.91
Two periods 0.83
Three periods 0.75
13. What is the present value of the serial bonds on January 1, 2020?
3,106,800

On January 1, 2020, R Company purchased 5-year bonds with face value of P8,000,000 and stated interest of 10% per year payable
semiannually January 1 and July 1. The bonds were acquired to yield 8%. Present value factors are:
PV of an annuity of 1 for 10 periods at 5% 7.72
PV of an annuity of 1 for 10 periods at 4% 8.11
PV of 1 for 10 periods at 4% 0.6756
14. What is the purchase price of the bonds? 8,648,800
15. What is the carrying amount of the bond investment on December 31, 2020? 8,538,542.08
16. What total income should be reported for 2020? 689,742.08

On January 1, 2020, Q Company purchased bonds with face value of P5,000,000 for P5,400,000. The stated interest rate is 8% payable
annually every December 31. The entity has elected the fair value option for the bond investment. On December 31, 2020, the bonds had
a fair value of P5,650,000.
17. What total income should be reported for 2020?
650,000

On January 1, 2020, T Company borrowed P5,000,000 from a bank at a variable rate of interest for 4 years. Interest will be paid annually
to the bank on December 31 and the principal is due on December 31, 2023. Under the agreement, the market rate of interest every
January 1 resets the variable ate for that period and the amount of interest to be paid on December 31. In conjunction with the loan, T
Company entered into a “receive variable, pay fixed” interest rate swap agreement with another bank speculator. The interest rate swap
agreement was designated as a cash flow hedge. The market rates of interest are:
January 1, 2020 10%
January 1, 2021 14%
January 1, 2022 12%
January 1, 2023 11%
The PV of an ordinary annuity of 1 is 2.32 at 14% for three periods, 1.69 at 12% for two periods and 0.90 at 11% for one period.
18. What is the notional of the interest rate swap agreement? 5,000,000
19. What is the derivative asset or liability on December 31, 2020? 464,000 assets
20. What is the derivative asset or liability on December 31, 2022? 45,000 assets