Sei sulla pagina 1di 2

INTERMEDIATE ACCOUNTING 1 | R.E.

MIRANDA
SUMMARY OF MEASUREMENT OF EQUITY INVESTMENTS
NOTE: *Cumulative UG/ UL  Equity
1. Held for trading- at FVPL Fair value XX
2. Not held for trading – at FVPL Original Cost (XX)
3. Not held for trading – at FVOCI by irrevocable election UG/ UL (SFP) XX
4. All other investments in QUOTED equity instruments- at FVPL
5. Investment in UNQUOTED equity instruments – at cost (see 3 important dates to remember
investment at associate for SME below) 1. DATE OF DECLARATION - date when payment
6. Investments of 20%-50% - equity method of accounting of dividends is approved by the Board of
7. Investments of more than 50%- consolidation method Directors
Dividend on
(NOTE: Irrevocable election is an election whereas you classify investment to 2. DATE OF RECORD - date on which the stock
OCI and you can't reclassify it to P&L [or vice versa] no matter what) and transfer book is closed for registration.
ONLY THOSE REGISTERED AS OF THIS DATE IS
Ex Dividend
INVESTMENTS IN EQUITY SECURITIES ENTITLE TO RECEIVE DIVIDENDS
3. DATE OF PAYMENT- is the date on which
FVPL FVOCI dividends declared shall be paid.
1. Transaction Cost Expensed Capitalized
2. Dividends Income Income KINDS of Dividends
3. SNI/ SNI/ SOCI -none- -none- CASH DIVIDENDS
4. CV, BS date Fair value Fair value  treated as income but if the equity method is used, the same should
5. Unrealized Gain/ Unrealized Loss P/L OCI be credited to investment account
(Change in FV) PROPERTY DIVIDENDS
6. *Cumulative Unrealized Gain/ -none- Equity  dividend income at FV of property
Unrealized Loss LIQUIDATING DIVIDENDS
 deduction from investment
STOCK DIVIDENDS (a.k.a. BONUS ISSUE)
INVESTMENT IN ASSOCIATE  Memo entry only
Investment in Associate (Equity Method) Amortization  Increases shares; decreases cost/ share; No effect on total cost of
Beginning Balance XX of Excess investment
1. SHARE SPLIT
Share in Net Income XX Share in Net Loss XX Depreciable/
Share in OCI (Gain) XX Share in OCI (Loss) XX Amortizable
A. SPLIT UP – Memo only, Increases shares
Negative goodwill XX Cash Dividend XX 2. Non- B. SPLIT DOWN – memo only, decreases shares
(a.k.a Income from Amortization of XX
depreciable/ SHARES RECEIVED IN LIEU OF CASH DIVIDENDS
non-
Acquisition) Excess FV over CV amortizable –  Income at the Fair Value of Shares Received; Dr. Investment Cr.
Ending balance XX (when sold) Dividend Income
3. Inventories
(when sold)
 In the absence of Fair value, the income is equal to the cash dividends
that would have been received
INTERMEDIATE ACCOUNTING 1 | R.E. MIRANDA
CASH RECEIVED IN LIEU OF STOCK DIVIDENDS SUMMARY OF MEASUREMENT OF DEBT INVESTMENTS
1. Held for trading- at FVPL
 The “AS IF APPROACH is followed.” Meaning, stock dividends are
2. Held for collection of contractual cash flows- at amortized cost (IAC)
assumed to be received and subsequently sold at the cash received.
3. Held for collection of contractual cash flows – at FVPL by irrevocable
Therefore, gain or loss may be recognized.
election
INVESTMENT IN ASSOCIATE for Small to Medium Sized Entities (SMEs) 4. Held for collection of contractual cash flows and for sale of the
financial asset- at FVOCI
COST EQUITY FAIR VALUE 5. Held for collection of contractual cash flows and for sale of the
1. Transaction financial asset- at FVPL by irrevocable election or fair value option
Capitalized Capitalized Expensed
Cost (NOTE: Irrevocable election is an election whereas you classify investment to OCI
Decrease in CV and you can't reclassify it to P&L [or vice versa] no matter what)
2. Dividend Income Income
of Investment
3. Impairment INVESTMENT IN DEBT SECURITIES
  -none-
Test
FVPL (to FVOCI (to sell IAC (to
CV –
4. CV, Balance CV – sell) & collect) collect)
Impairment Fair Value
Sheet Date Impairment Loss 1. Transaction Cost expensed Capitalized Capitalized
Loss
2. Amortization of Nominal- Nominal-
5. UG/ UL Taken to -NONE-
-none- -none- Premium/ Discount Effective Effective
(change in FV) Profit/ Loss
3. Interest Income FACE x CV x Effective CV x
NOTE: Impairment = Recoverable Value (FV less cost to sell) < CV
Nominal % % Effective %
4. CV, BS Date () Amortized
Fair value Fair Value
Cost
Statement of Comprehensive Income 5. UG/UL (Change in FV) Profit/ Loss OCI -none-
1. Components of Net Income 6. Cumulative UG/UL -none- Equity -none-
2. Components of other comprehensive income 7. Gain/Loss on Sale Profit/ Loss Profit/ Loss Profit/ Loss
a. Recycled to profit or loss
i. UG/UL on Debt Investment-FVOCI 1. Net Selling Price XX () Note: Carrying Value
ii. Foreign translation gain or loss Carrying Value () (XX) 1. FVPL = last FV
iii. UG/UL on derivative contract designated as Cash Flow Hedge Gain/ loss on Sale XX 2. FVOCI= updated amortized cost
b. Not recycled to profit of loss 3. IAC = updated amortized cost (date
i. UG/UL on Equity Investment-FVOCI (reclassified to RE upon of sale
disposal of investment) 2. PV of Face XX () Carrying Value, BS Date
ii. Revaluation Surplus (realization through RE) (PV of Periodic Interest) (XX) a. FAIR VALUE
iii. Remeasurement of defined benefit plan, including actuarial gain Issue Price XX * Total Amount (eg. P1,000)
or loss (remeasurements may be transferred within equity or RE) * Quoted Price (eg. 107; 97)
iv. Change in FV attributable to credit risk of Financial Liability *Effective Rate (eg. 10%; 77%)
designated as FVPL (transferred within equity or RE) b. AMORTIZED COST