Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Feherty, Incorporated accounts for its investments under IFRS No. 9 and purchased the following investments during December 2024: 1. Ninety of Donald Company's $1,000
Feherty, Incorporated accounts for its investments under IFRS No. 9 and purchased the following investments during December 2024: 1. Ninety of Donald Company's $1,000 bonds. The bonds pay semiannual interest, return principal in 12 years, and include no other cash flows or other features. Feherty plans to hold 30 of the bonds to collect contractual cash flows over the life of the investment and to hold 60, both to collect contractual cash flows but also to sell them if their price appreciates sufficiently. Subsequent to Feherty's purchase of the bonds, but prior to December 31, the fair value of the bonds increased to $1,080 per bond, and Feherty sold 30 of the 60 bonds. Feherty also sold 10 of the 30 bonds it had planned to hold to collect contractual cash flows over the life of the investment. The fair value of the bonds remained at $1,080 as of December 31, 2024. 2. $25,400 of Watson Company common stock. Feherty does not have the ability to significantly influence the operations of Watson. Feherty elected to account for this equity investment at fair value through OCI (FVOCI). Subsequent to Feherty's purchase of the stock, the fair value of the stock investment increased to $30,800 as of December 31, 2024. Required: 1. Indicate how Feherty would account for its investments when it acquired the Donald bonds and Watson stock. 2. For each of the following categories of Feherty's investments, calculate the effect of realized and unrealized gains and losses on Feherty's net income, other comprehensive income, and comprehensive income for the year ended December 31, 2024: (a) any Donald bonds accounted for at amortized cost that were purchased and held at year end, (b) any Donald bonds accounted for at amortized cost that were purchased and sold, (c) any Donald bonds accounted for at FVOCI that were purchased and held at year end, (d) any Donald bonds accounted for at FVOCI that were purchased and sold, and (e) the Watson stock. Ignore interest revenue and taxes. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2C Req 2D Req 2E For the Watson stock, calculate the effect of realized and unrealized gains and losses on Feher comprehensive income, and comprehensive income for the year ended December 31, 2024. I taxes. Note: Leave no cells blank - be certain to enter "0" wherever required.
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