Exercise 9-11

Bramble Corporation made the following purchases of investments during 2020, the first year in which Bramble invested in equity securities:

1.		On January 15, purchased 8,640 shares of Nirmala Corp.s common shares at $32.20 per share plus commission of $1,902.
2.		On April 1, purchased 4,800 shares of Oxana Corp.s common shares at $50 per share plus commission of $3,235.
3.		On September 10, purchased 6,720 shares of WTA Corp.s preferred shares at $25.70 per share plus commission of $2,794.

On May 20, 2020, Bramble sold 2,880 of the Nirmala common shares at a market price of $34 per share less brokerage commissions of $2,736. The year-end fair values per share were as follows: Nirmala $29, Oxana $53, and WTA $27. The chief accountant of Bramble tells you that Bramble 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. Assume that Bramble Corporation follows IFRS 9.

A. Prepare the journal entries to record the three investments.

B. Prepare the journal entry for the sale of the 2,880 Nirmala shares on May 20.

C. Prepare the adjusting entry needed on December 31, 2020.

D. Repeat the parts above, assuming the investments are accounted for using FV-OCI with no recycling. Brambles 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.

E. 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.

D. 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.)