Kroshka Holdings Corporation has several investments in the debt and equity securities of other companies: 1. 10-year
Question:
Kroshka Holdings Corporation has several investments in the debt and equity securities of other companies:
1. 10-year BCE bonds, purchased to earn interest.
2. 10-year GE bonds, intended to be sold if interest rates go down.
3. 1-year Government of Canada bonds, purchased to earn interest.
4. 180-day treasury bill, intended to be held to earn interest.
5. Bank of Montreal preferred shares, purchased to sell in the near term at a profit.
6. Tim Hortons common shares, purchased to sell in the near term at a profit.
7. 60% of the common shares of Pizzutto Holdings Corporation, a major competitor of Kroshka Holdings.
8. 22% of the common shares of Kesha Inc., one of Kroshka Holdings’ suppliers.
Instructions
(a) Indicate whether each of the above investments is a non-strategic or strategic investment.
(b) Indicate whether each of the above investments would be classified as a current asset or non current asset on Kroshka Holdings’ balance sheet.
(c) For each investment that you classified as non-strategic, indicate the value the investment will be reported at on the balance sheet assuming that Kroshka is a public company.
(d) How would your response to part (c) change if Kroshka were a private company reporting under ASPE?
Step by Step Answer:
Accounting Principles Part 3
ISBN: 978-1118306802
6th Canadian edition Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow