Lecture 02: Trading (Debt) Securities. Investment Accounting. [Intermediate Accounting] — Transcript

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1. 0:00welcome to sir wins accounting lectures
2. 0:03today
3. 0:03magakaron tainan pen and paper video
4. 0:06problem solving
5. 0:07but uncle select your 02 financial asset
6. 0:09at fair value through profit or loss
7. 0:12debt securities actually nasa
8. 0:14description
9. 0:29by you doing the problem solving
10. 0:34so again lecture 02 financial asset at
11. 0:37fair value through profit or loss
12. 0:39and here is our problem gerard aguilar
13. 0:42company carried out the following
14. 0:45transaction invest investment
15. 0:47health port trading during the current
16. 0:49year
17. 0:50transaction and here is the requirement
18. 0:53prepare journal entries to record the
19. 0:55transaction so basically pinapagawan
20. 1:00pertaining to financial asset at fair
21. 1:02value through profit or loss
22. 1:04basically health portrayed in asha all
23. 1:06right
24. 1:08so on july 2021 july 1
25. 1:12or here is our transaction purchase 5
26. 1:16000 1000 peso 12 percent months of
27. 1:19player erica company at 104 plus a crude
28. 1:22interest of 150 000
29. 1:27on april 1 and october 1. so basically
30. 1:32so we are going to debit trading
31. 1:34securities so
32. 1:36i guess true profit or loss
33. 1:52income which
34. 2:17all right that is the quoted price now
35. 2:19basically percentage yen
36. 2:21so times 104 percent or 1.04
37. 2:24basically that will be our bands all
38. 2:27right so debit trading securities
39. 2:29amounting to 5 million
40. 2:35synaptic is 200.000 problem that the
41. 2:36interest is 150 000
42. 2:38so therefore it is
43. 2:43basically human investment by million
44. 2:46two hundred thousand
45. 2:47at your interest 150 000 so that will
46. 2:50result to credit cash of by million
47. 2:53350 thousand all right that will be the
48. 2:56answer
49. 2:56to july 1 transaction and then
50. 2:59afterwards we have july 31 all right
51. 3:02purchase two thousand one thousand peso
52. 3:05twelve percent advance of risa linda
53. 3:07company
54. 3:07at ninety eight plus accrued interest
55. 3:11semi annual payment of interest may 31
56. 3:14and november thirty so same concept but
57. 3:19as of july 31 so therefore we are going
58. 3:21to debit
59. 3:22trading securities okay
60. 3:26accrued interest income
61. 3:56now how much is the value of the trading
62. 3:58securities the purchase price
63. 4:00okay so basically two thousand down
64. 4:04so therefore the face value is two
65. 4:07million
66. 4:07you buy that at 98 so therefore multiply
67. 4:10by 0.98 so
68. 4:12that is our debit trading securities one
69. 4:14million nine hundred sixty thousand
70. 4:16same goes through interest
71. 4:21interest payment date which is may 31 up
72. 4:23to the acquisition date which is july 31
73. 4:26basically two okay so therefore
74. 4:30young face value in the 2 million will
75. 4:32be multiplied by the
76. 4:33stated rate of 12 percent that will be
77. 4:36the annual interest
78. 4:37rate of 2 months therefore times 2
79. 4:41divided by twelve vienna
80. 4:46okay so forty thousand interest not in
81. 4:49and then basically we are going to
82. 4:50credit cash
83. 4:52forty thousand plus one million nine
84. 4:54hundred sixty thousand
85. 4:56so we will get credit to hash amounting
86. 4:58to two million so
87. 5:01acquisition of trading securities now
88. 5:04let's move on
89. 5:06to december thirty one okay perfectly
90. 5:46[Music]
91. 5:54[Music]
92. 6:33okay so litan so five million times
93. 6:36twelve percent
94. 6:37i six months there four times six
95. 6:40divided by twelve so we will get three
96. 6:42hundred thousand
97. 6:43you might collect for three months okay
98. 8:39that will be the annual interest and
99. 8:41then semi-annual transaction
100. 8:44annual i mean payment interest that's
101. 8:46why i multiply by
102. 8:476 divided by 12 so basically
103. 8:50six months the interest numbers
104. 9:06income amounting to forty thousand i
105. 9:09think that on interest income
106. 9:11okay one twenty thousand minus forty
107. 9:13thousand that would be
108. 9:15eighty thousand credit interest income
109. 9:17wedding balancing figures
110. 9:33value is 2 million multiplied by 12
111. 9:36percent then times
112. 9:384 divided by 12 we are just applying the
113. 9:40formula
114. 9:4180 000 and a record mona interest income
115. 9:45all right so that's it i believe
116. 9:48interest
117. 10:09and you are going to credit okay trading
118. 10:12securities because
119. 10:14basically and
120. 11:27million multiplied by the interest rate
121. 11:29of 12 percent now it's 240 000
122. 11:32per year pero ilan mulan last payment
123. 11:35date october going to december october
124. 11:38november
125. 11:39two months that's why two divided by 12.
126. 11:42all right so again 240 000
127. 11:45times 2 divided by 12.
128. 11:50interest
129. 11:54rates
130. 12:36on sale of trading securities sorry
131. 12:41this is a realized loss
132. 12:48of fair value all right from one point
133. 12:50going to another how
134. 12:52much is our loss
135. 12:56two million forty thousand italian two
136. 12:58thousand times one thousand times one
137. 13:00point zero two
138. 13:01two million forty thousand percent even
139. 13:03eventually
140. 13:04a two million
141. 13:19two million forty thousand young value
142. 13:21or no selling price numbers
143. 13:24recorded cause a two million eighty
144. 13:26thousand forty thousand
145. 13:28union lost no december one okay so
146. 13:31that's how we record
147. 13:32the sales on december 31
148. 13:36it is a transaction the following
149. 13:38quotations were obtained only air
150. 13:40combatants at 98
151. 13:41reselling the banks at 99.
152. 13:45investment is measured at fair value
153. 13:48nothing is determined
154. 13:49young effect unfair value changes so in
155. 13:51order to make that entry for december
156. 13:5331.
157. 13:55we have to compare the previous carrying
158. 13:58amount or in the fair value now oh i
159. 14:00still have nothing
160. 14:28thousand all right
161. 14:32that's why i'm practicing analytically
162. 14:34three divided by
163. 14:36five so i so three million one hundred
164. 14:38twenty thousand
165. 14:39and canyon caring about young remaining
166. 14:41bands
167. 14:51therefore the total carrying amount for
168. 14:53the moment
169. 14:54of eight three 120 plus one million nine
170. 14:57hundred
171. 14:58sixty thousand is basically five million
172. 15:00eighty thousand yen
173. 15:09basically three million
174. 15:14so we will get the fair value now of two
175. 15:16million nine hundred
176. 15:18forty thousand all right
177. 15:23ninety nine
178. 15:30so we will get one million nine hundred
179. 15:32eighty thousand
180. 15:34okay so total fair value is yeah
181. 15:37nothing so plus two nine forty dunsakris
182. 15:40linda
183. 15:40so we will get four million nine hundred
184. 15:43twenty thousand
185. 15:44all right and then afterwards we have to
186. 15:46determine how much is the gain or the
187. 15:48loss
188. 15:49okay erica nothing three million one
189. 15:53hundred twenty
190. 15:54thousand naginang two million nine
191. 15:56hundred forty thousand so we have to
192. 15:57compare
193. 15:58so basically 180 thousand
194. 16:02designations
195. 16:20twenty thousand so when we try to
196. 16:22compare okay
197. 16:24one hundred eighty thousand a loss that
198. 16:27was twenty thousand again
199. 16:28okay so therefore they receive one
200. 16:30hundred sixty thousand
201. 16:32nalos
202. 16:42basically we are going to debit
203. 16:44unrealized loss
204. 16:47dash trading securities amounting to 160
205. 16:51000
206. 16:52and we are going to credit trading
207. 16:54securities
208. 16:57changes a fair value amounting also to
209. 17:00160 thousand
210. 17:02okay
211. 17:06[Music]
212. 17:20interest income
213. 17:24and we are going to credit interest
214. 17:26income
215. 17:28okay interest income
216. 17:44percent so 360 thousand my own anglais
217. 17:48interest payment october 1. december 31.
218. 17:52october november december so three
219. 17:55months so times
220. 17:56three divided by twelve we know a
221. 18:02[Music]
222. 18:12um
223. 18:26multiply by interest rate which is 12
224. 18:28percent again
225. 18:29kailan and last interest payment
226. 18:31november 30 and that is
227. 18:33up from november 30 to december 31 that
228. 18:35is one month so therefore 240 000
229. 18:38times 1 divided by 12 so we will get
230. 18:41twenty thousand a month
231. 18:42interest paradigm guy risa linda's bands
232. 18:45all right so what can we say and trading
233. 18:49securities
234. 18:54payments