540 CHAPTER 9 Investments (c) Under what conditions might you recommend that the portfolio accounted for at FV-NI be reported somewhere other than where you indicated in part (b)? P9-2 The following information relates to the 2017 debt and equity investment transactions of Wildcat Ltd., a pub- DIGGING DEEPER hcly accountable Canadian corporation. All of the investments were acquired for trading purposes and accounted for using the FV-NI model, with all transaction costs being expensed. No investments were held at December 31, 2016, and the company prepares financial statements only annually, each December 31, following IFRS 9. Dividend and interest income are not recorded or reported separately from other investment income accounts. 1. On February 1, the company purchased Williams Corp. 12% bonds, with a par value of $500,000, at 106.5 phus accrued interest to yield 10%. Interest is payable April i and October 1. 2. On April 1, semi-annual interest was received on the Williams bonds. purchased at 3. On July 1, 9% bonds of Saint Inc. were purchased. These bonds, with a par value of $200,000, 101 plus accrued interest to yield 8.5%. Interest dates are June 1 and December 1. were 4. On August 12, 3,000 shares of Scotia Corp. were acquired at a cost of S59 per share. A 1 % commission was paid. 5. On September 1, Williams Corp. bonds with a par value of $100,000 were sold at 104 plus accrued interest 6. On September 28, a dividend of $0.50 per share was received on the Scotia Corp. shares. 7. On October 1, semi-annual interest was received on the remaining Williams Corp. bonds. 8. On December 1, semi-annual interest was received on the Saint Inc. bonds 9. On December 28, a dividend of $0.52 per share was received on the Scotia Corp. shares 10. On December 31, the following fair values were determined: Williams Corp. bonds 101.75; Saint Inc. bonds 97 and Scotia Corp. shares $60.50. Instructions (a) Prepare all 2017 journal entries necessary to properly (b) Prepare all 2017 journal entries necessary to properly account for the investment in the Saint Inc. bonds. (c) Prepare all 2017 journal entries necessary to properly account for the investment in the Scotia Corp. shares account for the investment in the Williams Corp. bonds. e trading investments on hand at December 31, 2016, accounted for using the FV-NI model, (d) Assume that there were and that they consisted of shares with a cost of $400,000 and a fair value of $390,000. These non-dividend-paying shares were sold early in 2017 and their original cost was recovered exactly. What effect would this transaction have on 2017 net income? (e) Assume that the interest income on the Saint Inc. bonds that were purchased on July 1, 2017, was separately racked and reported, Prepare the entries that are required on July 1, December 1, and December 31, 2017, to account for this investment Onvt 540 CHAPTER 9 Investments (c) Under what conditions might you recommend that the portfolio accounted for at FV-NI be reported somewhere other than where you indicated in part (b)? P9-2 The following information relates to the 2017 debt and equity investment transactions of Wildcat Ltd., a pub- DIGGING DEEPER hcly accountable Canadian corporation. All of the investments were acquired for trading purposes and accounted for using the FV-NI model, with all transaction costs being expensed. No investments were held at December 31, 2016, and the company prepares financial statements only annually, each December 31, following IFRS 9. Dividend and interest income are not recorded or reported separately from other investment income accounts. 1. On February 1, the company purchased Williams Corp. 12% bonds, with a par value of $500,000, at 106.5 phus accrued interest to yield 10%. Interest is payable April i and October 1. 2. On April 1, semi-annual interest was received on the Williams bonds. purchased at 3. On July 1, 9% bonds of Saint Inc. were purchased. These bonds, with a par value of $200,000, 101 plus accrued interest to yield 8.5%. Interest dates are June 1 and December 1. were 4. On August 12, 3,000 shares of Scotia Corp. were acquired at a cost of S59 per share. A 1 % commission was paid. 5. On September 1, Williams Corp. bonds with a par value of $100,000 were sold at 104 plus accrued interest 6. On September 28, a dividend of $0.50 per share was received on the Scotia Corp. shares. 7. On October 1, semi-annual interest was received on the remaining Williams Corp. bonds. 8. On December 1, semi-annual interest was received on the Saint Inc. bonds 9. On December 28, a dividend of $0.52 per share was received on the Scotia Corp. shares 10. On December 31, the following fair values were determined: Williams Corp. bonds 101.75; Saint Inc. bonds 97 and Scotia Corp. shares $60.50. Instructions (a) Prepare all 2017 journal entries necessary to properly (b) Prepare all 2017 journal entries necessary to properly account for the investment in the Saint Inc. bonds. (c) Prepare all 2017 journal entries necessary to properly account for the investment in the Scotia Corp. shares account for the investment in the Williams Corp. bonds. e trading investments on hand at December 31, 2016, accounted for using the FV-NI model, (d) Assume that there were and that they consisted of shares with a cost of $400,000 and a fair value of $390,000. These non-dividend-paying shares were sold early in 2017 and their original cost was recovered exactly. What effect would this transaction have on 2017 net income? (e) Assume that the interest income on the Saint Inc. bonds that were purchased on July 1, 2017, was separately racked and reported, Prepare the entries that are required on July 1, December 1, and December 31, 2017, to account for this investment Onvt