Question 7:

Dubai Inc. Purchase following stocks during the year 2021. All the investments were less than 20% in respective companies and were not having any controlling interest in any of the company.

Sr. No.	Name of the stock	Date of Purchase	Purchase Price
1	Investments in Etisalat	01/01/2021	100,000.00
2	Investments in Du	15/06/2021	60,000.00
3	Investments in Alia Pharmacy	11/11/2021	44,000.00

The fair market value of the shares as on 31^st December was as follows

Sr. No.	Name of the stock	Fair value as at 31/12/2021
1	Investments in Etisalat	180,000.00
2	Investments in Etisalat	156,000.00
3	Investments in Etisalat	92,000.00

Investments in Alia Pharmacy were sold for AED 47,000 on 7^th January 2022.

Company follows the fair value adjustment method of accounting for all of its minority passive investments.

Required:

1- Pass the necessary journal entries for purchase of shares.

2- Prepare the fair value adjustment for 2021

3- Prepare the journal entries for the sale of shares in 2022.

4- Explain the rationale of the entry which you have passed on 31^st December 2021 for adjusting the fair value.