Valix Finacc vol 1 Problem 9-13

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 9-13

2008    Available for sale securities                                                    6,000,000

                Cash                                                                                                          6,000,000

         Unrealized loss – AFS                                                                300,000

                Available for sale securities (6,000,000 – 5,700,000)                                      300,000

           

2009    Unrealized loss – AFS                                                                 500,000

                Available for sale securities (5,700,000 – 5,200,000)                                      500,000

            Held to maturity securities                                                     5,200,000

                Available for sale securities                                                                        5,200,000

The total unrealized loss of P800,000 (300,000 + 500,000) will still be reported in equity but it will be subsequently amortized through interest income over the remaining term of the debt securities.