Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Blue Spruce Corporation made the following purchases of investments during 2017, the first year in which Blue Spruce invested in equity securities: 1. On January

Blue Spruce Corporation made the following purchases of investments during 2017, the first year in which Blue Spruce invested in equity securities:


1.
On January 15, purchased 10,350 shares of Nirmala Corp.’s common shares at $38.53 per share plus commission of $2,277.
2.
On April 1, purchased 5,750 shares of Oxana Corp.’s common shares at $60 per share plus commission of $3,876.
3.
On September 10, purchased 8,050 shares of WTA Corp.’s preferred shares at $30.48 per share plus commission of $3,347.


On May 20, 2017, Blue Spruce sold 3,450 of the Nirmala common shares at a market price of $40 per share less brokerage commissions of $3,278. The year-end fair values per share were as follows: Nirmala $35; Oxana $63; and WTA $32. The chief accountant of Blue Spruce tells you that Blue Spruce Corporation holds these investments with the intention of selling them in order to earn short-term profits from appreciation in their prices and accounts for them using the FV-NI model, with no separate reporting of dividends and other types of FV-NI investment income and losses.

Assume that Blue Spruce Corporation follows IFRS 9.

Prepare the journal entries to record the three investments. (jan15, April 1, Sept10)

Prepare the journal entry for the sale of the 3,450 Nirmala shares on May 20.

Prepare the adjusting entry needed on December 31, 2017.

Repeat the parts above, assuming the investments are accounted for using FV-OCI with no recycling. Blue Spruce’s policy is to capitalize transaction costs on the acquisition of FV-OCI investments and reduce the proceeds on disposal.

Step by Step Solution

3.21 Rating (145 Votes )

There are 3 Steps involved in it

Step: 1

Part 1 Date Account Debit Credit Jan 15 2017 FVNI Investments 398786 Investment Income or Loss 2277 ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Document Format ( 2 attachments)

PDF file Icon
6364a3dbdada6_239606.pdf

180 KBs PDF File

Word file Icon
6364a3dbdada6_239606.docx

120 KBs Word File

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Accounting

Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith

13th edition

134472144, 978-0134472140

More Books

Students also viewed these Accounting questions

Question

Identify the primary goal of psychodynamic psychotherapy.

Answered: 1 week ago