Res, Reviexrs Sclrcol rnc.

Auditing Problenr IRENEO/ESPENILTA

Quizzer 6 Solution Guide

!RoUEElt-
!3trs-c-
quty se{urlties d another cornpany where no @ntrol nor ggnlncant
lnfluene extst. :Ttle @mp.any elected to report
Sahs or losses fn the
. M profts/loss€s
100,000
yyrl of a.dher oompany quoted tn .an acflve market. Bushess
moder of ilE cornpany h6 ah obje€0ve to hord debt se*flttes for short-
term pmllts,
T6l frnincial ass.t at Ft{ll, tirorJgh p&L

2. Ans. A"
Equtty seolrnrcs of another company where no contror nor
srgnrflcant
lnfluence exlst. The mlnpany elected to repfi galns or losses
ln the
other comprchenslve lncorne/osses
f ffi;6ol
3. Aff. A.
Debt security of andrer co]tpany guoted ln an acuve
nErket. Buslness
the company has an obJecdve of cx)llec0ng contractual
Todet-of 6sh_
nows ronr the bonds lrhlcll are prlmarlly ln the form of
pflndpat.
hterests and
E3EEO
1L Alt6. B.
20 Equlty securlues (f arlother company qlEted ln an 4uve rnarket l...EEpo;l
5. An* IL
51% Equlty securliles ofanother company quoted ln an acflve
rnarket f=40opool
6.AE B.
Real frropetty held for speqrla$on purpGes
Real property of a rnanufacturlhg buslne&s belng 700,000
le6ed out to another party
un&r operathg l€ase
Land held fof undetermlne{ ftJturE u* 90o,0oo
Real property belng developed 800,000
* an lnvcstment property 300.ooo
Toi.llmdmat pEpcrty
J a7oo,(xxt I
PnOBLEtt 2: pINAy CORpr
7. An& A
Pmeeds (50,000*58) 8. An& c.
2,900,000 Proceds (15,000*59)
CarFying \,alue (50,OOO*SS) 885,O00
2.750.000 Odginal Cost (15,000'60)
nG.lizGd g.itr lSO.(xx)
900.000
Rdli;cd r.<c (r.5.fi)o)
9. Ans. D.
-'-ii&lr'r{lASe,
Ftrurciai In*runen6:.,lyjing.ot-gq\b p/L is rctaltowed,m
the disposl of a Fnanaat t@t at ivv tiro"in ptt. '- -''- a reor/t, there shall Le rc gain or los an t e

1(}. An6. D.
Proceeds 1,100,000
Ac!rued interest (50,000)
\lalue (pZ,O3S,IOZ/Z)
Carry-ing (1,qYrsPl *half of tte carryiry value
Rcdirrcd gsin which is the fair vatue on 12.31. j3
324()9
Fl,N=PrBent \ralue of ft,ture esh flows at g yidd Ete
Principat (p2,ooo,oooao.84168) i,iCs"sio
Interest (P200,000*1.759111) 3Sl.B22
c',ttFrtl t2l3ttzoLs ---Z;6hii6i
11. An., A.
Procee& 1,100,000
Accru€d inter*t (s0,o00)
Ca-ryjng \bhE (p L,9l 3,566l?, (986_933) **half of the carryitV value
Rcidhd grin which is the amortized cost on 6//301i4
6:t.at67
Amortiatim tatile: Corect irterst NominallnteG Amottization Balance
UllLSl
tal3Llt3i
6/30174:
7t4,624 zoo,ooo 14,624 i:331:)33
108;116 100,000 8,116 1,973,866
la. /fns A.
Alpha strares (FMV thrwgh p/L) - (5O,OOOstl*6?)
3,lqr,o(b

13. An6. B.
Alpha sahres (FMV thrugh pl-)
Delta bonds (FMV ttrorArh pA) 3,100,000
To[.] Gurqrt lilrc.tmcnt 982.143 **.
rt,OB2-li*I
Fl,lv=Prent yaiue of rcmaining future Gsh
(p1,0o0,000r0.892857)
Principat
** 12%,
flows at yidd rate -'
SS2,8S]-
Intect (p10(),000*O.g92BS7) 89,286

PIIOBLEH 3: BEil-SlXrppE INC.

ta,-A!l=_A
15. Ans. C.

Aye Cqp. StEr

FM\l 17/14 CVlCo:it
Be€ Inc. Shares
700,000 540,000 (29.50-2-0.50)t2O,O0Osh
See rjo, 1096, 2M Bonds*
1,000,000 1,080,000 (27.50-.5o)*40,Oo0sh
(1,973,000-s0,000)
Unuliz.d hoHing gail - tS
Fimncial rssr*s iil flrivthrcu$h p&l.
=ffiH#mq t2l.94a
31664,9rt8
*l .cl_,19.11T^?fas laavTaiof can flows usins
PrirEipal (2t"1*O.BO72)
s.s*#ffi pre\rai li ng effecti ve rate)
L,614,433
Interest (100,000'3.5052) 350-515
- 1.9il.948