Question

Problem 3 Partial financial information for the Fredricka Corporation for its year ended December 31, 20x8 is as follows: 20x8 $685,000 105,000 dr. 20x7 $650,000 $20,000 cr. FVTOCI Investments A*OCI 35,000 Statement of Comprehensive Income - Other Comprehensive Income Loss on FVTOCI Investments ($40,000 Gain on on sale of investment + 55,000 Loss on FV Adjustment at year-end) Additional Information - 1. 2. All FVTOCI Investments are investments in the equity securities of corporations. One security whose original cost was $210,000 and carrying value was $250,000 was sold during the year. Required - Prepare the Cash Flow From Investing section of the Statement of Cash Flow based solely on the above transactions.

Answer 1

All the realised gain(On sale) and all the unrealised gains(From Fair value adjustment) are to
be recognised through OCI only.
FVTOCI Instrument A/c
To Balance b/d		$            650,000		By Bank A/c		$     290,000
				($250,000+$40,000)
To OCI (Gain on sale)		$              40,000		By OCI (Loss on FV Adjustment)		$        55,000
To Bank A/c (Purchase)		$            340,000
(Balancing Figure)				By Balance c/d		$     685,000
		$        1,030,000				$ 1,030,000
Cash Flow from Investing Activities
	Payment for Purchase of FVTOCI Instrument					$   (340,000)
	Proceeds from Sale of FVTOCI Instrument					$     290,000
	Cash Outflow from Investing Activities					$     (50,000)