Problem
On April 30, 2022, HEART purchased 12,000, P20 par ordinary shares of CHIZ for P400,000. Transaction costs paid amounted to P20,000. The securities meet the definition of held for trading securities. On December 31, 2022, the shares are quoted in the Philippine Stock Exchange at P40 per share. If the shares are sold on this date, the cost to sell would be P2 per share.
On January 3, 2023, HEART sold 9,000 CHIZ shares at P44 per share. On July 1, 2023, CHIZ effected a 2-for-1 split. On September 30, 2023, CHIZ declared and distributed 20% share dividends when the shares are quoted in the PSE at P48. The Board of Directors of CHIZ passed a resolution on November 1, 2023 to the effect that the shareholders shall contribute P20 for each share held. Lastly, CHIZ declared P10 cash dividends per share on December 15, 2023 to shareholders of record as of January 15, 2024, to be paid on January 31, 2024.
On December 31, 2023, CHIZ shares are quoted at P30 per share. If the shares are sold on this date, the cost to sell would be P2.40 per share.
1. How much shall be reported as dividend income?
2. How much shall be recognized as unrealized gain or loss due to fair value changes in the income statement for the year ended December 31, 2023?