question archive Lagoon Company purchased the following securities during 2010: Classification Cost Market value December 31, 2010 Security A Trading 900, 000 1, 000, 000 Security B Trading 1, 000,000 1, 600, 000 On July 31, 2011, the entity sold all of the shares of Security B for a total of P1, 000,000
Lagoon Company purchased the following securities during 2010: Classification Cost Market value December 31, 2010 Security A Trading 900, 000 1, 000, 000 Security B Trading 1, 000,000 1, 600, 000 On July 31, 2011, the entity sold all of the shares of Security B for a total of P1, 000,000
Subject:FinancePrice:2.87 Bought7
Lagoon Company purchased the following securities during 2010:
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Classification |
Cost |
Market value |
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|
|
December 31, 2010 |
|
|
Security A |
Trading |
900, 000 |
1, 000, 000 |
|
Security B |
Trading |
1, 000,000 |
1, 600, 000 |
On July 31, 2011, the entity sold all of the shares of Security B for a total of P1, 000,000. On December 31, 2011, the shares of Security A had a market value of P600, 000. No other the activity occurred during 2011 in relation to the trading security portfolio. What is the gain or loss on the sale of Security B on July 31, 2011?.
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Answer b |
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Sales price of Security B |
1, 100,000 |
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Carrying amount of Security B – December 31, 2010 |
1, 600,000 |
|
Loss on sale of trading securities |
(500, 000) |
PAS 39, paragraph 26, as amended by PFRS 9, provides that on derecognition of a trading a financial asset, the difference between the consideration received and the carrying amount of the asset shall be recognized in profit or loss.
