Pre-Test 1
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BLACKPINKLisaRoseJisooJenniePre-Test 1
Uploaded by
BLACKPINKLisaRoseJisooJenniePre-Test 1
Answer this test wisely.
1. Master Company acquired the following portfolio of trading securities during 2010 and reported
the following balance at December 31, 2010:
12.31.10
Security Cost Market Value
C P300,000 P280,000
B 360,000 370,000
A 500,000 460,000
No sales occurred during 2010. All declines are considered to be temporary. What is the carrying value of
the securities on December 31, 2010 on Master’s statement of financial position?
a. P1,110,000 c. P1,150,000
b. P1,160,000 d. P1,170,000
Solution: A
Security Market Value
C P 280,000
B 370,000
A 460,000
Total P1,110,000
2. Citibank purchased the following portfolio of trading securities during 2010 and report the
following balance at December 31, 2010. No sales occurred during 2010. All declines are
considered to be temporary.
12.31.10
Security Cost Market Value
X P 800,000 P 820,000
Y 1,400,000 1,320,000
Z 320,000 280,000
How much should Citibank as unrealized loss related to the securities transactions in its 2010 profit or
loss?
a. None c. P20,000 unrealized loss
b. P100,000 unrealized loss d.P120,000unrealized loss
Solution: B
Market Unrealized
Security Cost Value loss
X P 800,000 P 820,000
Y 1,400,000 1,320,000
Z 320,000 280,000
Total P2,520,000 P2,420,000 P100,000
3. First bank purchased the following portfolio of trading securities during 2010 and reported the
following balance at December 31, 2010. No sales occurred during 2010. All declines and
considered to be temporary.
12.31.10
Security Cost Market Value
AA P200,000 P205,000
BB 350,000 330,000
CC 280,000 270,000
Total P830,000 P805,000
How much should First Bank report as unrealized loss related to the securities transaction in its 2010
profit or loss?
a. None c. P5,000 unrealized loss
b. P25,000 unrealized loss d. P30,000 unrealized loss
Solution: B
Aggregate Market value P805,000
Less: Aggregate Cost P830,000
Unrealized Loss P 25,000
4. Primary Company purchased the following portfolio of trading securities during 2010 and
reported the following balance December 31, 2010. No sales occurred during 2010.
12.31.10
Security Cost Market Value
M P400,000 P 390,000
N 600,000 630,000
O 500,000 540,000
Total P1,500,000 P 1,560,000
How much should Primary Company report as unrealized gain or loss related to the securities transactions
in its 2010 profit or loss?
a. None c. P60,000 unrealized loss
b. P60,000 unrealized gain d.P70,000 unrealized gain
Solution: B
Aggregate Market value P1,560,000
Less: Aggregate Cost P1,500,000
Realized Loss P 60,000
5. Storm Company began business in November of 2009. During the year, Storm purchased the
three trading securities listed below. In its December 31, 2009 sheet, Storm appropriately
reported a P50,000 debit balance in its “Fair Value Adjustment-Trading Securities” account.
There was no change during 2010 in the composition of Storm’s portfolio of trading securities.
Pertinent data are as follows:
12. 31.10
Security Cost Market Value
G P 400,000 P 350,000
O 500,000 350,000
D 900,000 800,000
P1,800,000 P1,500,000
What amount of unrealized loss on these securities should be included in Storm’s profit or loss for the
year ended December 31, 2010?
a. None c. P300,000
b. P350,000 d. P400,000
Solution: B
Aggregate Market Value P1,500,000
Less: Aggregate Cost P1,800,000
FV adjustment 50,000 P1,850,000
Decrease in Value P 350,000
