Question
On 1 January 2014, Company C purchased a 5% investment in Company E for USD 100.000. the fair value of the 5% investment on 31
On 1 January 2014, Company C purchased a 5% investment in Company E for USD 100.000. the fair value of the 5% investment on 31 December 2014 was USD 120.000. Transaction costs amounted to USD 1.000 on 1 January 2014. What are the journal entries of Company C is required to process in respect of the purchased investment for the year ended 31 December 2014 assuming the investment is measured at fair value through profit or loss?
| A. | Dr. Investment 100.000 / Cr. Bank 100.000 Dr. Other expense 1.000 / Cr. Investment 1.000 Dr. Fair value adj (PL) / 20.000 Cr. Investment 20.000 | |
| B. | Dr. Investment 100.000 / Cr. Bank 100.000 Dr. Investment 1.000 / Cr. Bank 1.000 Dr. Fair value adj (PL) / 20.000 Cr. Investment 20.000 | |
| C. | Dr. Investment 100.000 / Cr. Bank 100.000 Dr. Other receivable 1.000 / Cr. Bank 1.000 Dr. Investment 20.000 / Cr. Other comprehensive income 20.000 | |
| D. | Dr. Investment 100.000 / Cr. Bank 100.000 Dr. Other expense 1.000 / Cr. Bank 1.000 Dr. Investment 20.000 / Cr. Fair value adj (PL) 20.000 |
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