Question 1

Colton's Western Wear Corp. (CWW) is a publicly reportable enterprise. Its year end is December 31. During 20X4 it invested some of its excess cash in various debt and equity securities. Pertinent details follow: All dividend and interest payments were received on the scheduled payment dates. . CWW only updates the book value of its investments at the time of the transactions and at year end. . CWW elects to reclassify reserves (AOCI) to retained earnings immediately upon derecognition of investments in equity securities at FVOCI - elect. January 1, 20X4 . Paid $2,600 to purchase 100 common shares of Zulu Inc. CWW elected to irrevocably classify the investment at FVOCI - elect. February 1, 20X4 Paid $11.65 per share to purchase 2,700 shares of PLZ Corp., a publicly traded company with over 1,000,000 shares outstanding. July 1, 20X4 . Paid $262,443 to acquire $250,000 of General Company Inc. six-year, 7% bonds. Interest is paid on June 30 and December 31 each year. CWW's objective of its business model for this investment is to hold the financial asset for purpose of collecting contractual cash flows. Paid $96,490 to acquire $100,000 of Gidget Corp.'s four-year, 5% bonds. Interest is paid on June 30 and December 31 each year. CWW's business model for this investment is to hold the investment with a view to profiting from a decline in the market rate of interest.December 15, 20X4 . PLZ declared dividends of $1.00 per share, payable on January 5, 20X5. . Zulu declared dividends of $0.50 per share, payable on December 31, 20X4. December 31, 20X4 Investment in Market value PLZ Corp. shares $29.85 per share Zulu Inc. shares $24.00 per share Market rate of interest General Company Inc.'s bonds 5.5% Gidget Corp.'s bonds 4.8% January 1, 20X5 . CWW reclassified its investment in General Company's bonds to at FVPL. CWW reclassified its investment in Gidget's bonds to amortized cost. July 1, 20X5 CWW sold all of its investments. The net proceeds of each sale follow: Investment in Sales price PLZ Corp. shares $27.50 per share Zulu Inc. shares $27.00 per share General Company Inc.'s bonds $258,000 Gidget Corp.'s bonds $106,000 Required: Prepare all journal entries to reflect the purchase, income recognition, revaluation, reclassification, and derecognition of the investments detailed in the question. Provide a separate journal entry for each event, date it, include a brief description of the pertinent details, and provide supporting calculations. Clearly indicate the nature of the investment in each journal entry (for example, Investment in Co. X - FVPL, FVOCI, or FVOCI - elect, or at amortized cost).Snowish Boutique Corp. (SBC) reports its financial results in accordance with IFRS and has a December 31 year end. As at December 31, 20X3, it had a number of tangible and intangible assets as detailed below: Snowish Boutique Corp. Property, plant, and equipment and intangible assets December 31, 20X3 Accumulated depreciation / Net book impairment to value, at Life (in Residual December 31, December 31, years) Cost value 20X3 20X3 Tools and other 15 $ 38,850 $ 0 $24,605 $14,245 equipment Vehicles - old 5 16,500 500 14.400 2,100 Computer 10,500 600 8,167 2,333 equipment Patent 15 75,000* *40,278 34,722 lo o Trademark NA 45,000 0 45,000 $185,850 $1,100 $87,450 $98,400 *Reported at its net amount of $34,722 on the statement of financial position Other information follows: 1. SBC uses the straight-line method to depreciate all depreciable assets other than computer equipment. The company takes a half-year of depreciation in the year of acquisition and a half-year of depreciation in the year of disposal. SBC uses a double-declining balance method to depreciate its computer equipment. 2. As SBC does not prepare interim statements, it only prepares adjusting entries at its year end. 3. The offsetting entry for depreciation expense is a credit to an accumulated depreciation account for both tangible and intangible assets. 4. The offsetting entry for impairment losses is a credit to an accumulated impairment loss account for both tangible and intangible assets. 5. SBC's trademark and patent are each considered to be a cash-generating unit as SBC leases (rents out) both these assets to an outside entity for a royalty fee. 6. SBC paid $75,000 to acquire a patent in 20X1. In 20X3 SBC wrote down the value of its patent $30,000 as it its value was judged to be impaired due to a competitor's copying of the design. During 20X4, SBC spent $12,000 successfully defending itspatent. In light of the successful patent defence, SBC now estimates that both the fair value of the patent and its value in use are $69,000. Estimated costs of disposal are $2,000. 7. SBC tested its trademark for impairment at its December 31, 20X4, year end. Its fair value and value in use were estimated to be $39,000 and $41,000, respectively. Estimated costs of disposal are $4,000. 8. During 20X4 the company bought and sold the following property, plant, and equipment: a) On March 15, 20X4, SBC paid $201,500 cash to purchase land to be used for future expansion, including $1,500 in legal fees directly attributable to the purchase. SBC elected to subsequently value the land using the revaluation model. The fair market value of the land on December 31, 20X4, was $208,000. b) October 1, 20X4, SBC purchased a new vehicle at a cost of $16,500 plus non- refundable taxes of $2,000. The expected useful life of the vehicle is five years, at which time the residual value is estimated to be $4,000. c) On November 15, 20X4 the company sold its old delivery vehicle for $800 cash. Required: Prepare journal entries to record the transactions detailed above including all adjusting entries required at December 31, 20X4. Prepare a separate entry for the depreciation of each asset and for other events that must be recorded