Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Feherty, Incorporated accounts for its investments under IFRS No. 9 and purchased the following investments during December 2024: 1. Seventy of Donald Company's $1,000 bonds.

Feherty, Incorporated accounts for its investments under IFRS No. 9 and purchased the following investments during December 2024:
1. Seventy of Donald Company's $1,000 bonds. The bonds pay semiannual interest, return principal in 8 years, and include no other cash flows or other features. Feherty plans to hold 10 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 $1,060 per bond, and Feherty sold 10 of the 60 bonds. Feherty also sold 8 of the 10 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 $1,060 as of December 31, 2024.
2. $25,200 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 $30,400 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.
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. For any Donald bonds accounted for at amortized cost that were purchased and sold; 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. Note: Leave no celis blank - be certain to enter \" 0 \" wherever requited. Answer is not complete. Complete this question by entering your answers in the tabs below. For the Watson stock, 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. Ignore interest revenue and taxes. Note: Leave no cells blank - be certain to enter \"o\" wherever required, Complete this question by entering your answers in the tabs below. For any Donald bonds accounted for at FvocI that were purchased and held at year end, 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 \\). Note: Leave no cells blank:- be certain to enter \" 0 \" wherever required. Feherty, incorporated accounts for its investments under. IFRS No. 9 and purchased the following investments during December 2024 1. Seventy of Donald Companys \\( \\$ 1,000 \\) bonds. The bonds pay semiannual interest, return principal in 8 years, and include no othes cash flows or other features. Feherty plans to hold 10 of the bonds to collect contractuaf cash flows over the life of the investment and to hold 60 , both to collect contractual casti flows but aiso to seli them if their price appreciates sufficiently Subsequent to Feherty's puschase of the bonds, but prior to December 31 , the fair value of the bonds increased to \\( \\$ 1060 \\) per bond, and Feherty sold -10 of the 60 bonds Feherty also sold 8 of the 10 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 \\( \\$ 1.060 \\) as of Decernber 31,2024 2.\\$25,200 of Watson Company common stock. Feherty does not have the ability to significantly influerice the operations of Watsan. 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 \\( \\$ 30,400 \\) as of Deceniber 31, 2024 Required: 1. Indicate how Feherty would account for its investments when it ocquired the Donald bonds and Watson stock 2. For each of the following categones of Fehertys investments, calculate the effect of realized and unrealized gains and losses on Feherty's net income, other comprehensive income, and comptehenswe income for the vear ended December 31.2024 (a) any Donald bonds accounted for at amortized cost that were purchased and held at year end. (o) ary Donaid bonds accounted for at amortized cost that were purchased and sold (c) any Donalo bornds accounted for at Fvocl that were purchosed and held at year end (6) any Donalid bonds accounted for at FVOCl that were purchased and sold, and (c) the Watsonstock. Ignore interest revenue and takes Complete this question by entering your answers in the tabs below. Answer is not complete. Complete this question by entering your answers in the tabs below. For any Donald bonds accounted for at amortized cost that were purchased and held at year end, calculate the effect of realizad and unreallized gains and losses on Foherty's nat income, other cornprehensive income, and comprehensive income for the year ended December 31,2024 . Note: Leaven no cells blank - be certaln to enter \" 0 \" wherever required

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

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

Auditing Information Systems Enhancing Performance Of The Enterprise

Authors: Abraham Nyirongo

1st Edition

1490754997, 9781490754994

More Books

Students also viewed these Accounting questions

Question

define what is meant by the term human resource management

Answered: 1 week ago