Frank Corporation invested its excess cash in investments accounted for using the fair value through other comprehensive income (FV-OCI) model during 2010. At December 31, 2010, the portfolio consisted of the following common shares:

Investment # shares Cost Fair Value

(and current carrying value)

Lara Inc. 1,000 shares $13,000 $19,000

Paula Inc. 2,000 shares 42,000 44,000

Aryn Inc. 2,000 shares 72,000 60,000

$127,000 $123,000

Frank Corporation applies the FV-OCI model with unrealized gains and losses reclassified to retained earnings.

FOR 2010:

1. Make the journal entry at December 31, 2010 to adjust the share investments to their fair value? (1 marks)
2. What is the balance of accumulated other comprehensive income (AOCI) at December 31, 2010? (1 mark)

FOR 2011:

In 2011, Frank Corporation sold 2,000 shares of Paula Inc. for $36,400 less a $1,250 brokerage fee. In that same year, Frank Corporation purchased 500 more shares of Lara Inc. for $7,000. Frank Corporation pays no brokerage fees on share purchases. Aryn Inc. paid Frank Corporation a $1,500 cash dividend.

The December 31, 2011 portfolio of FV-OCI investments were as follows:

Investment # shares Fair Value

Lara Inc. 1,500 shares $ 49,000

Aryn Inc. 2,000 shares 22,000

3. Make all the required journal entries to record the transactions related to the Paula Inc. shares in 2011. (8 marks)
4. Record the purchase of the additional Lara Inc. shares in 2011. (2 marks).
5. Record the dividend payment received by Frank Corporation in 2011. (1 mark)
6. Make the journal entry at December 31, 2011 to adjust the share investments to their fair value? (2 marks)
7. Prepare the following financial statements (partial) for 2011 (use the proper 3-line heading):
8. 1. Statement of Earnings (2 marks)
   2. Statement of Comprehensive Income (4 marks) (assume net income $100,000)
   3. Statement of Changes in Shareholders Equity for Accumulated Other Comprehensive Income (AOCI). (3 marks)
   4. Statement of Financial Position at Dec 31, 2011 (1 mark)