Reclassifiction:

On 31 December 20X6, TKB Companys investments in equity securities were as follows:

	Carrying Value	AOCI: Equity Reserve: Holding Gains and Losses (Cumulative)
FVOCI-Equity investment
Gold Corp., common shares	$763,500	$42,230 loss
FVTPL investment
MacKinnon Corp., common shares	781,300
AC investment
Walsh Ltd. 7% bonds, $300,000 par value	297,000
Significant-influence investment Orr Ltd.	2,394,000

Required:

1. Explain what the carrying value for each investment represents.

2. What was the original cost of the FVOCI investment?

3. TKB reclassified the AC investment to a FVTPL investment on this date, when its fair value was $316,000. Explain how the reclassification will be reflected in the financial statements. How is fair value established?

4. TKB reclassifies the Orr common shares as a FVTPL investment when the fair value is $2,519,000. What accounting is required for this reclassification?

5. What is the rule for classifications in and out of the FVOCI-Equity category?