4) Audit of Investments

8/12/2019 4) Audit of Investments

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Audit of Investments

L. R. Cabarles


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Relevant Standards

Financial Instruments Standards PAS 32Presentation

PAS 39Recognition and Measurement

PFRS 7Disclosures

PFRS 9Financial Instruments

Other Standard

PAS 28Investments in Associates and

Joint Ventures

(Effective 01.01.13)


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PAS 39: Classification offinancial assets

Financial assets at fair valuethrough profit or loss(FA@FVTPL)

1) Held for trading

2) Designated

Held-to-maturity (HTM)

Loans and receivables (L&R)

Available-for-sale (AFS)


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PAS 39: Classification Based onCharacteristics of Instrument

Category Derivative?

Type ofInstrument Quoted?

FA @

FVTPL

YES or NO Debt or

equity

YES or NO

AFS NO Debt orequity

YES or NO

HTM NO Debt YES

L&R NO Debt NO


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PAS 39: Classification Based onIntention

Intention (Purpose) Classification

To be sold immediately Held for Trading

To be held to maturity HTM/L&R

To be held indefinitely AFS


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PAS 39: Financial AssetsMeasurement Summary

Category Initial Sub-sequent

Change inFV

FA @ FVTPL FV FV P/L

AFS FV + TC FV/Cost/AC OCI

(Equity)

HTM FV + TC AC Ignore

L&R FV + TC AC Ignore


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PFRS 9: Classification offinancial assets

Financial assets at fair valuethrough profit or loss(FA@FVTPL)

Financial assets at amortizedcost

Financial assets at fair valuethrough other comprehensiveincome (FA@FVTOCI)


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PFRS 9: Classification Based onCharacteristics of Instrument

Category Derivative?

Type ofInstrument

FA @ FVTPL YES or NO Debt or equity

FA @ AC NO Debt

FA @

FVTOCI

NO Equity


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PFRS 9: Financial AssetsMeasurement Summary


Change inFV


FA @ AC FV + TC AC Ignore

FA @

FVTOCI

FV + TC FV OCI

(Equity)


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PFRS 9:Classification of

Financial AssetsSummary


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Problem No. 1


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Requirement A (1)

FA@FVTPL

FA@FVTPL P874,164Commission expense 50,000

Cash P924,164

Available-for-saleAFS securities P924,164

Cash P924,164

Held-to-maturityHTM securities P924,164

Cash P924,164


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Requirement A (2)

FA@FVTPL

Interest receivable (P1M x .08) P80,000

Interest income P80,000

Available-for-sale

Same entry

Held-to-maturity

Same entry


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Requirement A (3)

FA@FVTPL

No entry

Available-for-sale

AFS securities P ?

Interest income P ?

Held-to-maturity

HTM securities P ?

Interest income P ?


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Effective interest rate (10%)

PV of Principal

(P1M x 0.6209) P620,900

PV of Interest

(P1M x .08 x 3.7908) 303,264

CA of financial asset P924,164


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Original Amortization Schedule

Date EI(10%)

NI(8%)

Disc.Amort.

A.C.

1/1/12 924,164

12/31/12 92,416 80,000 12,416 936,580

12/31/13 93,658 80,000 13,658 950,238

12/31/14 95,024 80,000 15,024 965,262

12/31/15 96,526 80,000 16,526 981,788

12/31/16 98,212 80,000 18,212 1,000,000


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Requirement A (3)

FA@FVTPL

No entry

Available-for-sale

AFS securities P12,416

Interest income P12,416

Held-to-maturity

HTM securities P12,416Interest income P12,416


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Requirement A (4)

FA@FVTPL

FV adj. (P980,000 P874,164) = P105,836

FA@FVTPL P105,836FV adj. gainFA@FVTPL (P/L) P105,836

Available-for-saleFV adj. (P980,000 P936,580) = P43,420

AFS securities P 43,420

FV adj. G/L

AFS (OCI) P 43,420

Held-to-maturityNo entry


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Requirement B

CategorySubsequentMeasuremen

t

CA,12/31/12

FA@FVTPL FV P980,000

AFS FV/Cost/AC P980,000

HTM AC P936,580


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Problem No. 2


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Sales proceeds P540,000CA of investment(P1.8M x 24/72) ( 600,000)

Loss on sale (P 60,000)

Requirement # 1-A


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Gain (Loss) on sale, 8/15

Total proceeds P1,176,000Dividends sold (4,800 x P30) ( 144,000)

Net proceeds 1,032,000CA of investment

(P1.32M x 48/66) ( 960,000)

P 72,000


Sales proceeds P 276,000

CA of investment(P1.32M x 12/66) ( 240,000)

P 36,000

Total gain P 108,000

Requirement # 1-B

Total amount paid P1,440,000

Purchased dividend

(6,000 x P20) ( 120,000)Initial CA of 4WARD P1,320,000

No. of shares held (6,000 x 1.1) 6,600


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Declared, 1/2 P -Declared, 5/2 -Declared, 8/1

(6,600 x P30) 198,000

Dividend income P198,000

Requirement # 1-C


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FV of 4WARD shares

[(6,000 x 1.1)-4,800-1,200]

= 600 x P210 P 126,000FV of BACK shares

(7,200 2,400)

= 4,800 x P240 1,152,000Total fair value P1,278,000

Requirement # 1-D


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Requirement # 2

1/10

Dividend income P120,000Trading securities (P20 x 6,000) P120,000

2/20

No AJE

3/01

Loss on sale of TS P 60,000

Trading securities P 60,000

5/21

Retained earnings P132,000

Trading securities P132,000


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Requirement # 2

8/15

Trading securities P216,000Dividend income P144,000

Gain on sale of TS 72,000

9/01Trading securities P 36,000

Gain on sale of TS P 36,000

12/31, FV Adj.


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Trading securities

FV Adjustment, 12/31/12


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Trading securities1/10 1,320,000



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Trading securities1/10 1,320,000

2/20 1,800,000



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Trading securities1/10 1,320,000 600,000 3/1

2/20 1,800,000



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2/20 1,800,000 960,000 8/15



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2/20 1,800,000 960,000 8/15

240,000 9/1



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2/20 1,800,000 960,000 8/15

240,000 9/1



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2/20 1,800,000 960,000 8/15

240,000 9/1

Balance 1,320,000



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2/20 1,800,000 960,000 8/15

240,000 9/1

Balance 1,320,000

FV 1,278,000



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2/20 1,800,000 960,000 8/15

240,000 9/1

Balance 1,320,000 ? FV adj.

FV 1,278,000



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2/20 1,800,000 960,000 8/15

240,000 9/1

Balance 1,320,000 42,000 FV adj.

FV 1,278,000



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Requirement # 2

8/15

Trading securities P216,000Dividend income P144,000

Gain on sale of TS 72,000

9/01Trading securities P 36,000

Gain on sale of TS P 36,000

12/31, FV Adj.FV adjustment loss (P/L) P 42,000

Trading securities P 42,000


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Problem No. 3

Req i ement # 1 A


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Proceeds, net P125,000Cost of investment(P390,000 x 5/15) ( 130,000)

( 5,000)


Total proceeds P 120,000

Dividend sold (2,000 x P50 x 20%) ( 20,000)

Proceeds, net 100,000

Cost of investment(P390,000 x 2/15) ( 52,000)

48,000

Dividend income 150,000

Net amount in P/L P 193,000

Requirement # 1-A

Dividend income 2012:

Share div., 3/15 P -Cash div., 11/01 (10,000 x P5) 50,000

Cash div., 12/01 (10,000 x P50 x .2) 100,000

Total P150,000

Requirement # 1B

CA, 12/31/12 (FV)

(8,000 x P13.75) P110,000

Requirement # 2 A


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Proceeds, net P125,000Cost of investment(P390,000 x 5/15) ( 130,000)

( 5,000)


Total proceeds P 120,000

Dividend sold (2,000 x P50 x 20%) ( 20,000)

Proceeds, net 100,000

Cost of investment(P390,000 x 2/15) ( 52,000)

48,000

Dividend income 150,000

Net amount in P/L P 193,000

Requirement # 2-A

Requirement # 2 A


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Amount in P/L 2012:

Dividend income P 150,000

Requirement # 2-A

Requirement # 2B

CA, 12/31/12 (FV)

(8,000 x P13.75) P110,000


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Problem No. 5

Date Shares Unit Cost Total cost


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o o o

1/2/10 30,000 @35 1,050,000

7/2/11 90,000 @60 5,400,000

3/2/12 30,000 @70 2,100,000

AJE 1

Dividend income P120,000Retained earnings P120,000



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1/2/10 30,000 @35 1,050,000

7/2/11 90,000 @60 5,400,000

3/2/12 30,000 @70 2,100,000

P.D.



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1/2/10 30,000 @35 1,050,000

7/2/11 90,000 @60 5,400,000

3/2/12 30,000 @70 2,100,000

P.D. ( 30,000)



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1/2/10 30,000 @35 1,050,000

7/2/11 90,000 @60 5,400,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 2,070,000

AJE 2

Dividend income P30,000Investment in Silver Tab P30,000



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1/2/10 30,000 @35 1,050,000

7/2/11 90,000 @60 5,400,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

Computation of gain (loss):

Sales proceeds (50T x P40) P2,000,000Less cost of investment sold ?



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000)

7/2/11 90,000 @60 5,400,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35

7/2/11 90,000 @60 5,400,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000)

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000


Sales proceeds (50T x P40) P2,000,000

Less cost of investment sold:

From 2010 P1,050,000

From 2011 1,200,000 2,250,000

Loss on sale of investment (P 250,000)

AJE 3

Loss on sale P250,000

Investment in Silver Tab P250,000



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

4,200,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 4,200,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

AJE 4

Investment in Red Tab P20,000Dividend income P20,000



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

AJE 5Dividend income P100,000

Investment in Silver Tab P100,000



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

12/20/12



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

12/20/12 . ( 30,000)



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

70,000 4,130,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

12/20/12 . ( 30,000)



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

70,000 @59 4,130,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

12/20/12 . ( 30,000)



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

70,000 @59 4,130,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

12/20/12 . ( 30,000)

30,000 2,040,000



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

70,000 @59 4,130,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

12/20/12 . ( 30,000)

30,000 @68 2,040,000


Sales proceeds (10T x P90) P900,000

Less cost of investment sold(10,000 x P59) 590,000

Gain on sale of investmentP310,000

AJE 6

AR Non-trade P900,000

Investment in Silver Tab P590,000Gain on sale of investment 310,000



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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

70,000 @59 4,130,00012/28/12

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

12/20/12 . ( 30,000)

30,000 @69 2,040,000


/ /


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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

70,000 @59 4,130,00012/28/12 (10,000)

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

12/20/12 . ( 30,000)

30,000 @69 2,040,000


1/2/10 30 000 @35 1 050 000


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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

70,000 @59 4,130,00012/28/12 (10,000) @59

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

12/20/12 . ( 30,000)

30,000 @69 2,040,000


1/2/10 30 000 @35 1 050 000


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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

70,000 @59 4,130,00012/28/12 (10,000) @59 ( 590,000)

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

12/20/12 . ( 30,000)

30,000 @69 2,040,000


1/2/10 30 000 @35 1 050 000


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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

70,000 @59 4,130,00012/28/12 (10,000) @59 ( 590,000)

60,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

12/20/12 . ( 30,000)

30,000 @69 2,040,000


1/2/10 30 000 @35 1 050 000


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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

70,000 @59 4,130,00012/28/12 (10,000) @59 ( 590,000)

60,000 @59

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

12/20/12 . ( 30,000)

30,000 @69 2,040,000


1/2/10 30 000 @35 1 050 000


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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

70,000 @59 4,130,00012/28/12 (10,000) @59 ( 590,000)

60,000 @59 3,540,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

12/20/12 . ( 30,000)

30,000 @69 2,040,000


1/2/10 30 000 @35 1 050 000


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1/2/10 30,000 @35 1,050,000

7/15/12 (30,000) @35 (1,050,000)

7/2/11 90,000 @60 5,400,0007/15/12 (20,000) @60 (1,200,000)

70,000 @60 4,200,000

12/20/12 . ( 70,000)

70,000 @59 4,130,00012/28/12 (10,000) @59 ( 590,000)

60,000 @59 3,540,000

3/2/12 30,000 @70 2,100,000

P.D. . ( 30,000)

30,000 @69 2,070,000

12/20/12 . ( 30,000)

30,000 @69 2,040,000

Carrying of Investment in Silver Tab:

From 2011 P3,540,000

From 2012 2,040,000

Total P5,580,000


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Problem No. 6

Question # 1


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Question # 1

Sale of Laoag, Inc. Shares (TS)

Proceeds, net P152,000

Less carrying amount

(P288,000 x 8/16) 144,000

Gain on sale P 8,000

Question # 2


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Question # 2

Sale of Batac, Inc. Shares (AFS)

Proceeds, net

(3,200 x P15) P48,000

Less cost of investment

(P960,000 x 3.2/80) 38,400

Gain on sale P 9,600

Question # 3


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Question # 3

Santiago bonds

(P200,000 x .1) P 20,000Ilocos bonds

(P1,926,000 x .14) 269,640

Total interest income P289,640

Effective interest rate computation:

CA, 12/31/11 P1,926,000

Less initial CA 1,900,000

Discount amortization 26,000

Nominal interest (P2M x .12) 240,000

Effective int. inc. -2011 266,000

Divide by initial CA 1,900,000

.14

Question # 4


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Question # 4

CA of trading securities:

Vigan, Inc. (9,600 x P22) P211,200

Laoag, Inc. (8,000 x P15) 120,000

Santiago bonds 151,200

P482,400CA of AFS:

Candon Products (32T x P42) P 1,344,000

Pagudpud, Inc. (240T x P28) 6,720,000

Batac, Inc. (76,800 x P18) 1,382,400Ilocos bonds (P2M x 1.01) 2,020,000

P11,466,400


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Problem No. 8

Journal entries - 2010


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Journal entries 2010

Acquisition

AFS securities P500,000Cash P500,000

Share of profitNo entry

DividendsCash P15,000


FV adjustmentAFS securities P70,000

FV adj. gain - OCI P70,000

Requirement # 1


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Dividend income (P/L) P15,000

FV adjustment gain (OCI)(P570T P500T) 70,000

Total amount in CI P85,000

Requirement # 1



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Journal entries 2011

Share of profit

No entry

Dividends

Cash P20,000


FV adjustment

FV adj. gain - OCI P45,000

AFS securities P45,000

Balances, 12/31/11

AFS = P525,000; FV adj. gain-OCI = P25,000

Requirement # 2


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Dividend income (P/L) P20,000

FV adjustment loss (OCI)(P525T P570T) (45,000)

Total amount in CI (P25,000)

Requirement # 2

Investing in Stages


85/178

g g In a business combination achieved in

stages, the acquirer shall remeasure itspreviously held equity interest in theacquiree at its acquisition-date fair valueand recognize the resulting gain or loss, ifany, in profit or loss.

In prior reporting periods, the acquirermay have recognized changes in the valueof its equity interest in the acquiree inother comprehensive income (OCI).

If so, the amount that was recognized in

OCI shall be recognized on the same basisas would be required if the acquirer haddisposed directly of the previously heldequity interest.



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Acquisition

Investment in associate P2,100,000FV adj. gain-AFS (OCI) 25,000

Cash P1,575,000AFS securities 525,000

Gain on derecognition-AFS(P/L) 25,000

Retrospective adjustment (Requirement # 3)

None



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Share of profit

Share of profit (P550T x .4) P220,000Excess amortization (P440,000/8) ( 55,000)Share of profit , net P165,000

Investment in associate P165,000SOPA P165,000

DividendsCash P70,000

Investment in associate P70,000

FV adjustmentNo entry

Requirement # 4


88/178

Total purchase price P2,100,000

Share of profit, net 165,000

Dividends ( 70,000)

CA, 12/31/12 P2,195,000

q


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Problem No. 10

Question # 1

1 1 08^-5


90/178

Q

PV of Principal

(P10M x 0.6806) P 6,806,000PV of Interest

(P10M x .1 x 3.9927) 3,992,700

PV, 1/1/09 10,798,700

Less prem. amort. 1/1 4/1:NI (P10M x .1 x 3/12) P250,000

EI (PV x .08 x 3/12) (215,974) 34,026

Purchase price, 4/1/09 10,764,674

Accrued interest 250,000

Total amount paid P11,014,674

1.08^-51 1.08^ 5

.08

Question # 2


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Q

PV of Principal

(P10M x 0.7350) P 7,350,000

PV of Interest

(P10M x .1 x 3.3121) 3,312,100

AC, 12/31/09 P10,662,100

1.08^-4

1 1.08^-4

.08

PAS 39: Financial Assets


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Measurement Summary


Change inFV


AFS FV + TC FV/Cost/AC OCI

(Equity)

HTM FV + TC AC Ignore

L&R FV + TC AC Ignore

PAS 39: Financial AssetsI i t S


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Impairment Summary

Measure

ment

Loss

computation

Reversal



94/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL



95/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a



96/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

AC



97/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

AC CA PV of CF

(Use orig. EIR)

PAS 39: Financial AssetsImpai ment S mma


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Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

AC CA PV of CF

(Use orig. EIR)

P/L, subject to

limit

PAS 39: Financial AssetsImpairment Summary


99/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

AC CA PV of CF

(Use orig. EIR)

P/L, subject to

limitCost



100/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

AC CA PV of CF

(Use orig. EIR)

P/L, subject to

limitCost CA PV of CF

(Use prev. IR)



101/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

AC CA PV of CF

(Use orig. EIR)

P/L, subject to


(Use prev. IR)Not allowed



102/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

AC CA PV of CF

(Use orig. EIR)

P/L, subject to



AFS-Equity



103/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

AC CA PV of CF

(Use orig. EIR)

P/L, subject to



AFS-Equity Cost - FV


104/178



105/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

AC CA PV of CF

(Use orig. EIR)

P/L, subject to



AFS-Equity Cost - FV OCI (Equity);

prohibited in P/L

AFS-Debt



106/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

AC CA PV of CF

(Use orig. EIR)

P/L, subject to




prohibited in P/L

AFS-Debt AC - FV



107/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

AC CA PV of CF

(Use orig. EIR)

P/L, subject to




prohibited in P/L

AFS-Debt AC - FV P/L (subject tolimit); excess OCI

(Equity)

PFRS 9: Financial AssetsM t S


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Measurement Summary


Change inFV


FA @ AC FV + TC AC Ignore

FA @FVTOCI

FV + TC FV OCI

(Equity)

PFRS 9: Financial AssetsImpairment Summary


109/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL

FVTOCI

AC



110/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a

FVTOCI

AC



111/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

FVTOCI

AC



112/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

FVTOCI n/a

AC



113/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

FVTOCI n/a n/a

AC



114/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

FVTOCI n/a n/a

AC CA PV of CF(Use orig. EIR)



115/178

Impairment Summary

Measure

ment

Loss

computation

Reversal

FVTPL n/a n/a

FVTOCI n/a n/a

AC CA PV of CF(Use orig. EIR)

P/L, subject tolimit

Question # 3

1 1 08^-2


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PV of Principal

(P10M x 0.8573) P 8,573,000

PV of Interest

(P10M x .1 x 1.7833) 1,783,300

AC, 12/31/11 10,356,300PV of CF (P8M x .8573) 6,858,400

Impairment loss P 3,497,900

1.08^-21 1.08^ 2

.08

Question # 4

Interest income - 2012

(P6,858,400 x .08) = P548,672

Question # 5


117/178

PV of expected CF, 12/31/12

(P13M x 0.9259) P12,036,700

AC w/o imp., 12/31/12

(P11M x 0.9259) P10,184,900

Carrying amount,12/31/12

CA, 12/31/11 6,858,400

Disc. Amort. 2012 548,672

7,407,072Gain on reversal P 2,777,828

1.08^-1


118/178

Problem No. 11

Requirement # 1 CA,12/31


119/178

B C D



120/178

B C D

Purchase price



121/178

B C D

Purchase price 10,000



122/178

B C D

Purchase price 10,000 15,000



123/178

B C D

Purchase price 10,000 15,000 28,000



124/178

B C D

Purchase price 10,000 15,000 28,000

Transaction costs (1%)



125/178

B C D

Purchase price 10,000 15,000 28,000

Transaction costs (1%) 100



126/178

B C D

Purchase price 10,000 15,000 28,000

Transaction costs (1%) 100 150



127/178

B C D

Purchase price 10,000 15,000 28,000

Transaction costs (1%) 100 150 280



128/178

B C D

Purchase price 10,000 15,000 28,000


Total cost



129/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100



130/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150



131/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280



132/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

Impairment loss

FV CTS of Entity B (P13M x .95) = P12.35M



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B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

Impairment loss -


FV CTS of Entity C (P29M x .95) = P27.55M



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B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

Impairment loss - -



FV CTS of Entity D (P15M x .95) = P14.25M



135/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

Impairment loss - - (14,030)






136/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

Impairment loss - - (14,030)CA, 12/31/12






137/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

Impairment loss - - (14,030)CA, 12/31/12 10,100






138/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

Impairment loss - - (14,030)CA, 12/31/12 10,100 15,150






139/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

Impairment loss - - (14,030)CA, 12/31/12 10,100 15,150 14,250




CA Entity B, 12/31/12 P10,100,000

CA

Entity C, 12/31/12 15,150,000CA Entity D, 12/31/12 14,250,000

Total P39,500,000

Requirement # 1: P/L2012


140/178

Dividend income:

B (P1M x .25) P 250,000C (P8M x .25) 2,000,000

Impairment loss (D) ( 14,030,000)

Net amount in P/L (P11,780,000)

Requirement # 2: CA


141/178

FV, 12/31/12

Entity B P13MEntity C 29M

Entity D 15M

Total P57M

Requirement # 2 P/L


142/178

B C D

Requirement # 2 P/L


143/178

B C D

Transaction costs (1%)

Requirement # 2 P/L


144/178

B C D

Transaction costs (1%) ( 100)

Requirement # 2 P/L


145/178

B C D

Transaction costs (1%) ( 100) ( 150)

Requirement # 2 P/L


146/178

B C D

Transaction costs (1%) ( 100) ( 150) ( 280)

Requirement # 2 P/L


147/178

B C D


Dividend income

Requirement # 2 P/L


148/178

B C D


Dividend income 250

Requirement # 2 P/L


149/178

B C D


Dividend income 250 2,000

Requirement # 2 P/L


150/178

B C D


Dividend income 250 2,000 -

Requirement # 2 P/L


151/178

B C D



FV adjustment gain (loss)

FV adjustment of Entity B (P13M P10M) = P3M

Requirement # 2 P/L


152/178

B C D



FV adjustment gain (loss) 3,000


FV adjustment of Entity C (P29M

P15M) = P14M

Requirement # 2 P/L


153/178

B C D



FV adjustment gain (loss) 3,000 14,000



P15M) = P14MFV adjustment of Entity D (P15M P28M) = (P13M)

Requirement # 2 P/L


154/178

B C D



FV adjustment gain (loss) 3,000 14,000 (13,000)




Requirement # 2 P/L

B C D


155/178

B C D




Net amount in P/L




Requirement # 2 P/L

B C D


156/178

B C D




Net amount in P/L 3,150




Requirement # 2 P/L

B C D


157/178

B C D




Net amount in P/L 3,150 15,850




Requirement # 2 P/L

B C D


158/178

B C D




Net amount in P/L 3,150 15,850 (13,280)


FV adjustment of Entity C (P29M P15M) = P14M

FV adjustment of Entity D (P15M P28M) = (P13M)

P/L Entity B P 3,150,000

P/L Entity C 15,850,000

P/L Entity B ( 13,280,000)

Total P 5,720,000

Requirement # 3 CA

B C D


159/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

Requirement # 3 CA

B C D


160/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA)

Requirement # 3 CA

B C D


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B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250

Requirement # 3 CA

B C D


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B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500

Requirement # 3 CA

B C D


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B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Requirement # 3 CA

B C D


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B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Dividends

Requirement # 3 CA

B C D


165/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Dividends ( 250)

Requirement # 3 CA

B C D


166/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Dividends ( 250) (2,000)

Requirement # 3 CA

B C D


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B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Dividends ( 250) (2,000) -

Requirement # 3 CA

B C D


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B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Dividends ( 250) (2,000) -

CA, 12/31/12-before IL

Requirement # 3 CA

B C D


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B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Dividends ( 250) (2,000) -

CA, 12/31/12-before IL 11,100

Requirement # 3 CA

B C D


170/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Dividends ( 250) (2,000) -

CA, 12/31/12-before IL 11,100 17,650

Requirement # 3 CA

B C D


171/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Dividends ( 250) (2,000) -

CA, 12/31/12-before IL 11,100 17,650 23,280

Requirement # 3 CA

B C D


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B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Dividends ( 250) (2,000) -

CA, 12/31/12-before IL 11,100 17,650 23,280

Impairment loss




Requirement # 3 CA

B C D


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B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Dividends ( 250) (2,000) -

CA, 12/31/12-before IL 11,100 17,650 23,280

Impairment loss - - ( 9,030)




Requirement # 3 CA

B C D


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B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Dividends ( 250) (2,000) -

CA, 12/31/12-before IL 11,100 17,650 23,280


CA, 12/31/11

Requirement # 3 CA

B C D


175/178

B C D

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Dividends ( 250) (2,000) -

CA, 12/31/12-before IL 11,100 17,650 23,280


CA, 12/31/11 11,100

Requirement # 3 CA

B C D


176/178

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Dividends ( 250) (2,000) -

CA, 12/31/12-before IL 11,100 17,650 23,280


CA, 12/31/11 11,100 17,650

Requirement # 3 CA

B C D


177/178

Purchase price 10,000 15,000 28,000


Total cost 10,100 15,150 28,280

SOPA (SOLA) 1,250 4,500 ( 5,000)

Dividends ( 250) (2,000) -

CA, 12/31/12-before IL 11,100 17,650 23,280


CA, 12/31/11 11,100 17,650 14,250

Requirement # 2 P/L, 2012 (P 8,280,000)

CA Entity B, 12/31/12 P11,100,000

CA Entity C, 12/31/12 17,650,000

CA Entity D, 12/31/12 14,250,000

Total P43,000,000


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End

4) Audit of Investments

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