Question

Marigold Ltd. had the following investment portfolio at January 1, 2020: Investment Quantity Cost per Share Fair Value at Dec. 31, 2019 Earl Corp. 990 $14.30 $11.00 Josie Corp. 910 19.30 16.00 Asher Corp. 500 8.50 6.50 During 2020, the following transactions took place: 1. On March 1, Josie Corp. paid a $2 per share dividend. 2. On April 30, Marigold sold 300 shares of Asher Corp. for $9.30 per share. 3. On May 15, Marigold purchased 200 more Earl Corp. shares at $15.30 per share. 4. At December 31, 2020, the shares had the following market prices per share: Earl Corp. $16.30; Josie Corp. $18.30; and Asher Corp. $7.30. During 2021, the following transactions took place: 5. On February 1, Marigold sold the remaining Asher Corp. shares for $6.30 per share. 6. On March 1, Josie Corp. paid a $2 per share dividend. 7. On December 21, Earl Corp. declared a cash dividend of $3 per share to be paid in the next month. 8. At December 31, 2021, the shares had the following market prices per share: Earl Corp. $18.30 and Josie Corp. $20.30. Assuming that Marigold Ltd. is a publicly accountable enterprise that accounts for its investment portfolio at FV-OCI (with no recycling to net income), prepare journal entries to record all of the 2020 and 2021 transactions and year-end events.

Answer 1

Marigold Ltd. had the following investment portfolio at January 1, 2020: Fair Valueat Dec. 31, 2019 Cost per Share 990 Investment Quantity $14.30 $11,00 Earl Corp. Josie Corp. 910 19.3 16 Asher Corp. 8.5 500 6.5 In the books of Marigold Ltd: Event Date Account Title Debit Credit 2020 1-Mar Cash 1820 Dividend revenue(910*2) 1820 Sale of Investments at FVOCI: If an investment is accounted for using the fair value through other comprehensive income (FVOCI), the accumulated gains or losses are stored directly in equity and routed through income statement in the period in which the investment is sold. 30-Apr Cash(300*9.30) 2790 Equity Investment in Asher Corp(300*6.50) Gain on Sale of Investment((9.30-8.5) *300) (Unrealized loss) in other comprehensive income((6.5-8.5) *300) 1950 240 600 15-May Equity Investment in Earl Corp(200*15.30) 3060 Cash 3060

F C D E Net Fair Valueat Dec. 31, 2019 Investment Cost per Share Fair Value Net change change formula $16.30 F28-E28 $16.30 F29-D29 Quantity as of 31 december 2020 at Dec. 31, 2020 amount 28 Earl Corp 990 $14.30 $11.00 5.3 29 200 $15.30 1 30 Josie Corp. 910 19.3 18.3 F30-E30 16 2.3 200 31 Asher Corp. 7.3 F31-E31 6.5 8.5 0.8 31-Dec Equity Investment in Josie Corp.(910*2.30) 2093 (Unrealized gain) in other comprehensive income 2093 31-Dec Equity Investment in Asher Corp.(200*0.80) 160 (Unrealized gain) in other comprehensive income 160 31-Dec Equity Investment in Earl Corp.(900*5.30)+(200 1) 4970 (Unrealized gain) in other comprehensive income 4970

2021 1-Feb Cash(200*6.30) Loss on Sale of Investment((6.30-8.5) *200) 1260 440 Equity Investment in Asher Corp(200*7.30) 1460 (Unrealized loss) in other comprehensive income((7.3-8.5)*200) 240 1-Mar Cash 1820 Dividend revenue(910*2) 1820 21-Dec No journal entry as the dividend hasnot yet received F C D Net Fair Valueat Dec. 31, 2019 Investment Cost per Share Fair Value Fair Value Net change change formula amount $18.30 G28-F28 Quantity as of 31 december 2020 at Dec. 31, 2020 at Dec. 31, 2021 $11.00 990 56 Earl Corp. $14.30 $16.30 $2.00 57 $18.30 G28-F28 $15.30 $16.30 $2.00 200 58 Josie Corp. 16 20.3 G28-F28 910 $2.00 19.3 18.3 59 Asher Corp. 6.5 8.5 7.3 7.3 0.8 31-Dec Equity Investment in Josie Corp. (910*2.00) 1820 Equity Investment in Earl Corp.(1190*2) 2380 (Unrealized gain) in other comprehensive income 4200