On 31 December 20X6, TKB Company’s investments in equity securities were as follows:

Required:

1. Explain what the carrying value for each investment represents.

2. What was the original cost of the FVOCI investment?

3. TKB reclassified the AC investment to a FVTPL investment on this date, when its fair value was $316,000. Explain how the reclassification will be reflected in the financial statements. How is fair value established?

4. TKB reclassifies the Orr common shares as a FVTPL investment when the fair value is $2,519,000. What accounting is required for this reclassification?

5. What is the rule for classifications in and out of the FVOCI Equity category?

Transcribed Image Text:

AOCI: Equity Reserve: Holding Galns and Carrying Losses Value (Cumulative) FVOCI-Equity investment Gold Corp., common shares $763,500 $42,230 loss FVTPL investment MacKinnon Corp., common shares 781,300 AC investment WalshLtd.7%bonds, $300,000parvalue 297,000 Significant-influence investment Orr Ltd. 2,394,000