ZuoTi.Pro
Question

London Ltd. reported the following transactions and information regarding the shares of Dolma Corp: 15 October 20X2, purchaseb. FVTPL method. 20x2 20x3 2 0X4 Earnings Dividend revenue Fees and commissions expense Holding gains (losses) Statement of f

c. FVOCI-Equity method; realized amounts are transferred to retained earnings. 20x2 20x3 20x4 Earnings Dividend revenue Fees

please Help! I really need help for this question!

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Solutions:

Cost Method
20X2 20X3 20X4
Earnings
Dividend Revenue 1500 1500 1000
Fees and Commision 1200 800
Loss on Sale -2000
Statement of Financial Position
Investment 132000 132000 88000
OCI : Holding gain/loss - - -

Under Cost method, Dividends and Fees & commission and any realised loss or gain on sale of investment is taken to the Profit and loss. Investment are always taken at cost no adjustment for fair value is made. 20X2: 3000*44 = 132000; 20X3: 3000*44 = 132000; 20X2: 2000*44 = 88000 (1000 units sold at a loss of $2($42-$44) each share)

FVTPL Method
20X2 20X3 20X4
Earnings
Dividend Revenue 1500 1500 1000
Fees and Commision 1200 800
Holding gains/losses -18000 27000 -12000
Statement of Financial Position
Investment 114000 141000 82000
OCI : Holding gain/loss - - -

Under FVTPL, Dividends are recognized as a part of income as any holding loss or gain. The investments are adjusted to Fair value at the end of every year. The Holding gain or loss on investment is treated under profit and loss.

FVTOCI Method
20X2 20X3 20X4
Earnings
Dividend Revenue 1500 1500 1000
Fees and Commision 1200 800
Holding gains/losses - - -
Statement of Financial Position
Investment 114000 141000 82000
OCI : Holding gain/loss -18000 27000 -12000
Transfer to retained earnings -5000

Under FVTOCI, Dividends are recognized as a part of income. However all gains and losses are recognized directly in OCI/equity without classifying them under profit and loss, even when the investment is subsequently sold.The investments are adjusted to Fair value at the end of every year. Gain or loss on sale of investment is transferred to retained earnings. Here 1000 shares are sold at $42, the fair value was $47 per share, resulting in a loss of $5 per share.

1 0
Add a comment
Know the answer?
Add Answer to:
please Help! I really need help for this question! London Ltd. reported the following transactions and...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Chen Group acquired 25% of the outstanding ordinary shares of Cho Ltd. on December 31, 2019....

    Chen Group acquired 25% of the outstanding ordinary shares of Cho Ltd. on December 31, 2019. The purchase price was ¥165000000 for 50000 shares. Cho declared and paid an ¥80 per share cash dividend on June 30 and on December 31, 2020. Cho reported net income of ¥73000000 for 2020. The fair value of Cho's shares was X3550 per share at December 31, 2020. At what amount is the investment reported on the statement of financial position under each of...

  • On 1 November 20X8, Porter Company acquired the following FVTPL investments: Minto Corp.—3,700 common shares at...

    On 1 November 20X8, Porter Company acquired the following FVTPL investments: Minto Corp.—3,700 common shares at $15 cash per share Pugwash Corp.—850 preferred shares at $25 cash per share The annual reporting period ends 31 December. Quoted fair values on 31 December 20X8 were as follows: Minto Corporation common, $13 Pugwash Corporation preferred, $28 The following information relates to 20X9:   2 March Received cash dividends per share as follows: Minto Corporation, $2.10; and Pugwash Corporation, $1.20.   1 October Sold 220...

  • P16.7A (LO 3, 4) AN Sandhu Ltd. has 400,000 common shares authorized and 120,000 shares issued...

    P16.7A (LO 3, 4) AN Sandhu Ltd. has 400,000 common shares authorized and 120,000 shares issued on December 31, 2020. On January 2, 2021, Kang Inc., which reports under IFRS, purchased shares of Sandhu for $40 per share on the stock market from another investor. Kang intends to hold these shares as a long-term investment and initially categorizes it as FVTOCI. Analyze investment and compare fair value, equity method, and cost method. Kang's accountant prepared a trial balance as at...

  • Question Two 2 On 1 January 20X1 Kindly sets up a cash-based payment to each of its 100 employees, on condition that th...

    Question Two 2 On 1 January 20X1 Kindly sets up a cash-based payment to each of its 100 employees, on condition that they continue to work for the entity untl 31 December 20X3. Each employee has been allocated 100 shares and will receive a payment in cash if the share price exceeds R10 on 31 December 20X3, of the amount by which it exceeds R10. During 20X1, 5 employees leave. The entity estimates that a further 12 will leave during...

  • please help! On 1 November 20X8, Porter Company acquired the following FVTPL investments: • Minto Corp.-2,600...

    please help! On 1 November 20X8, Porter Company acquired the following FVTPL investments: • Minto Corp.-2,600 common shares at $20 cash per share • Pugwash Corp.-600 preferred shares at $30 cash per share The annual reporting period ends 31 December. Quoted fair values on 31 December 20X8 were as follows: • Minto Corporation common, $17 • Pugwash Corporation preferred, $34 The following information relates to 20X9: 2 March 1 October 31 December Received cash dividends per share as follows: Minto...

  • Stock Investment Transactions, Equity Method and Available-for-Sale Securities Glacier Products Inc. is a wholesaler of rock...

    Stock Investment Transactions, Equity Method and Available-for-Sale Securities Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31: Year 1 Jan. 18. Purchased 6,800 shares of Malmo Inc. as an available-for-sale investment at $42 per share, including the brokerage commission. July 22. A cash dividend of $0.65 per share was received...

  • MESSAGE MY INSTRUCTOR STANDARD VIEW PRINTER VERSION BACK NEXT Problem 9-4 Swifty Corp, has the following...

    MESSAGE MY INSTRUCTOR STANDARD VIEW PRINTER VERSION BACK NEXT Problem 9-4 Swifty Corp, has the following securities (all purchased in 2020) in its investment portfolio on December 31, 2020: 2,570 Anderson Corp. common shares, which cost $48,650; 11,100 Munter Ltd, common shares, which cost $580,300; and 6,340 King Corp. preferred shares, which cost $255,200. Their fair values at the end of 2020 were as follows: Anderson Corp. $50,580; Munter Ltd. $569,400; and King Corp. $254,900. In 2021, Swifty completed the...

  • Can't figure out the rest. Please let me know if I'm doing the rest right. PRINTER...

    Can't figure out the rest. Please let me know if I'm doing the rest right. PRINTER VERSION 4 BACK NEXT KES Question 2 Pearl Ltd. is a Canadian publicly-traded business with a December 31 fiscal year end. In order to get a better return on some of its excess cash, Pearl purchased 110 common shares of AFS Corporation on July 1, 2020 ata price of $5 per share. Due to the nature of the investment Pearl's management is accounting for...

  • Stock Investment Transactions, Equity Method and Available-for-Sale Securities Glacier Products Inc. is a wholesaler of rock...

    Stock Investment Transactions, Equity Method and Available-for-Sale Securities Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31: Year 1 Jan. 18. Purchased 8,800 shares of Malmo Inc. as an available-for-sale investment at $54 per share, including the brokerage commission. July 22. A cash dividend of $0.60 per share was received...

  • Ayayai Corporation made the following purchases of investments during 2020, the first year in which Ayayai...

    Ayayai Corporation made the following purchases of investments during 2020, the first year in which Ayayai invested in equity securities: 1. On January 15, purchased 8,100 shares of Nirmala Corp.’s common shares at $30.10 per share plus commission of $1,782. 2. On April 1, purchased 4,500 shares of Oxana Corp.’s common shares at $47 per share plus commission of $3,033. 3. On September 10, purchased 6,300 shares of WTA Corp.’s preferred shares at $23.90 per share plus commission of $2,619....

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT