Question
CulverCorporation made the following purchases of investments during 2020, the first year in whichCulverinvested in equity securities: 1.On January 15, purchased11,790shares of Nirmala Corp.'s common
CulverCorporation made the following purchases of investments during 2020, the first year in whichCulverinvested in equity securities:
1.On January 15, purchased11,790shares of Nirmala Corp.'s common shares at $43.90per share plus commission of $2,595.
2.On April 1, purchased6,550shares of Oxana Corp.'s common shares at $68per share plus commission of $4,415.
3.On September 10, purchased9,170shares of WTA Corp.'s preferred shares at $35.30per share plus commission of $3,812.
On May 20, 2020,Culversold3,930of the Nirmala common shares at a market price of $46per share less brokerage commissions of $3,734. The year-end fair values per share were as follows: Nirmala $39, Oxana $72, and WTA $37. The chief accountant ofCulvertells you thatCulverCorporation 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.
Assume thatCulverCorporation follows IFRS 9.
what are the journal entries to record the three investments?
Show the journal entry for the sale of the3,930Nirmala shares on May 20
the adjusting entry needed on December 31, 2020
Repeat the parts above, assuming the investments are accounted for using FV-OCI with no recycling.Culver's policy is to capitalize transaction costs on the acquisition of FV-OCI investments and reduce the proceeds on disposal. In addition, the company reclassifies any gains or losses on disposition to Retained Earnings.
What is the amount that will be reported as other comprehensive income for the year ended December 31, 2020? Show the wording that would appear on the comprehensive income statement.(If an amount reduces the account balance then enter with negative sign.)
What will be the balance in Accumulated Other Comprehensive Income on December 31, 2020? (If an amount reduces the account balance then enter with negative sign.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started