Sarasota Corporation made the following purchases of investments during 2020, the first year in which Sarasota invested in equity securities: 1. On January 15, purchased 11,070 shares of Nirmala Corp.'s common shares at $41.20 per share plus commission of $2,436. On April 1, purchased 6,150 shares of Oxana Corps common shares at $64 per share plus commission of $4,145. On September 10, purchased 8,610 shares of WTA Corp.s preferred shares at $32.60 per share plus commission of $3,579. 2. 3. May 20, 2020, Sarasota sold 3,690 of the Nirmala common shares at a market price of $43 per share less brokerage com ssions of $3,506. The year-end fair values per share were as follows: Nirmala $37, Oxana $68, and WTA $34. The chief accountant of Sarasota tells you that Sarasota Corporation holds these investments with the intention of selling them in order to earn short-term profits from appreciation in their prices and accounts for them using the FV-NI model. Assume that Sarasota Corporation follows IFRS 9. Prepare the journal entries to record the three investments. (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 O for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 15 FV-NI Investments Investment Income or Loss Cash Apr. 1 FV-NI Investments Investment Income or Loss Cash Sep. 10 FV-NI Investments Investment Income or Loss Cash Prepare the journal entry for the sale of the 3,690 Nirmala shares on May 20. (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 O for the amounts.) Date Account Titles and Explanation Debit Credit May 20 Cash FV-NI Investments Gain on Disposal of Investments - FV-NI Prepare the adjusting entry needed on December 31, 2020. (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 O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31 FV-NI Investments Investment Income or Loss Repeat the parts above, assuming the investments are accounted for using FV-OCI with no recycling. Sarasota's policy is to capitalize transaction costs on the acquisition of FV-OCI investments and reduce the proceeds on disposal. In addition, the company reclassifies any gains or losses on disposition to Retained Earnings. (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 Ofor the amounts.) Date Account Titles and Explanation Debit Credit (a) Jan. 15 FV-OCI Investments Cash Apr. 1 FV-OCI Investments Cash Sep. 10 FV-OCI Investments Cash (b) May 20 FV-OCI Investments Unrealized Gain or Loss - OCI (To adjust to fair value at date of disposal) May 20 Cash FV-OCI Investments (To record disposal) May 20 Accumulated Other Comprehensive Income Retained Earnings (To reclassify holding gain) (c) Dec. 31 Unrealized Gain or Loss - OCI FV-OCl Investments What is the amount that will be reported as other comprehensive income for the year ended December 31, 2020? Show the wording that would appear on the comprehensive income statement. (If an amount reduces the account balance then enter with negative sign.) Other Comprehensive Income Items that may not be reclassified subsequently to net income Holding losses arising during the year $ Fair value adjustment May 20 On Nirmala Corp. shares sold $ Year end fair value adjustment for portfolio Total $ ta What will be the balance in Accumulated Other Comprehensive Income on December 31, 2020? (If an amount reduces the account balance then enter with negative sign.) Balance of Accumulated Other Comprehensive Income: Beginning balance Other comprehensive income for 2020 Less Reclassification adjustment Ending balance December 31, 2020 $
