Question
London Ltd. reported the following transactions and information regarding the shares of Dolma Corp: 5 October 20X2, purchased 3,600 shares at $48 per share plus
London Ltd. reported the following transactions and information regarding the shares of Dolma Corp:
5 October 20X2, purchased 3,600 shares at $48 per share plus $1,500 commission. 1 December 20X2, received $0.40 per share cash dividend. 31 December 20X2, fair value is $42 per share. 1 December 20X3, received $0.40 per share cash dividend. 31 December 20X3, fair value is $51 per share. 15 November 20X4, sold 1,200 shares at $48 per share less $920 commission. 1 December 20X4, received $0.40 per share cash dividend. 31 December 20X4, fair value is $47 per share.
Required:
1. Show the amounts and accounts that would be reported in earnings and the statement of financial position for 20X2, 20X3, and 20X4 if the company uses the
a. Cost method. 20X2 20X3 20X4 Earnings Dividend revenue $ 1,440 $ 1,440 $ 960 Fees and commissions expense $ 1,500 920 Loss on sale Statement of financial position Investment $ 172,000 $ 172,000 115,200 OCI: Holding gain/(loss) b. FVTPL method. 20X2 20X3 20X4 Earnings Dividend revenue Fees and commissions expense $ 1,440 $ 960 1,440 $ $ 1,500 920 Holding gains (losses) Statement of financial position Investment OCI: Holding gain/(loss) c. FVOCI-Equity method; realized amounts are transferred to retained earnings. 20X2 20X3 20X4 Earnings Dividend revenue Fees and commissions expense Holding gains (losses) Statement of financial position Investment OCI: Holding gain/loss) Transfer to Retained Earnings 0
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