Pina Colada Technologies Inc. held a portfolio of shares and bonds that it accounted for using the fair value through other comprehensive income model at December 31, 2017. This was the first year that Pina Colada had purchased investments. In part due to Pina Coladas inexperience, by December 31, 2017, the market value of the portfolio had dropped below its original cost by $28,600. Pina Colada recorded the necessary adjustments at December 31, 2017 and was determined to hold the securities until the unrealized loss of 2017 could be recovered. By December 31, 2018, Pina Coladas goals of recovery had been realized and the original portfolio of shares and bonds had a fair market value $7,500 higher than the original purchase costs. Pina Coladas income tax rate is 39% for all years. Assume that any gains that will ultimately be realized on the sale of the shares and bonds are taxable as ordinary income when they are realized. Pina Colada applies IFRS.

1-

Prepare the journal entries at December 31, 2017 to accrue the unrealized loss on Pina Coladas securities and the related income tax. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date-------

Account Titles and Explanation-----------

Debit---------------

Credit

Dec 31, 2017 (2 entries only)

(To bring the investments to their fair value.)

Dec 31, 2017 (2 entries only)

(To record deferred tax asset.)

2- Prepare the journal entries at December 31, 2018 to accrue the unrealized gain on the securities and the related income tax. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

----Account Titles and Explanation

----Debit

-----Credit

Prepare the journal entries at December 31, 2017 to accrue the unrealized loss on Pina Coladas securities and the related income tax. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date-------

Account Titles and Explanation-----------

Debit---------------

Credit

Dec 31, 2017 (2 entries only)

(To bring the investments to their fair value.)

Dec 31, 2017 (2 entries only)

(To record deferred tax asset.)

3- Prepare a comparative statement of comprehensive income for the fiscal years ending December 31, 2017 and 2018. Assume net income of $128,000 in each fiscal year. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Pina Colada Technologies Inc.

Comparative Statement of Comprehensive Income

Year Ended December 31

4- Indicate how the deferred tax accounts should be presented on the statement of financial position at December 31, 2018.

Pina Colada Technologies Inc. Statement of Financial Position