QUESTION 1 (20 marks):

At December 31, 2020, Perth Inc. has the following investments. Assume the FVTPL investments are held for trading.

Security

Investment Category

Carrying Value

Fair Value

Co. A common shares

FVTPL

$19,000

$16,000

Co. B preferred shares

FVTPL

11,500

14,000

Co. C common shares

FVTOCI

21,000

19,000

Total

$51,500

$49,000

(a)Prepare the adjusting entries required at December 31 to reflect the above information.

(b)Show the financial statement presentation (balance sheet AND statements of income and comprehensive income) of the investments and related transactions and adjustments at December 31, 2020. (Ignore income tax.)

BE SPECIFIC AS TO CLASSIFICATION AND ACCOUNT TITLE.

(c)Assuming that on March 20, 2021, Perth sold Co. B preferred shares for $13,000, and sold Co. A common shares for $17,500.Prepare the journal entries to record these transactions.