Bridgeport Corporation made the following purchases of investments during 2020, the first year in which Bridgeport invested in equity securities:
| 1. | On January 15, purchased 9,540 shares of Nirmala Corp.’s common shares at $35.50 per share plus commission of $2,100. | |
| 2. | On April 1, purchased 5,300 shares of Oxana Corp.’s common shares at $55 per share plus commission of $3,572. | |
| 3. | On September 10, purchased 7,420 shares of WTA Corp.’s preferred shares at $28.40 per share plus commission of $3,085. |
On May 20, 2020, Bridgeport sold 3,180 of the Nirmala common shares at a market price of $37 per share less brokerage commissions of $3,021. The year-end fair values per share were as follows: Nirmala $32, Oxana $58, and WTA $30. The chief accountant of Bridgeport tells you that Bridgeport 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 Bridgeport Corporation follows IFRS 9.
Repeat the parts above, assuming the investments are accounted for using FV-OCI with no recycling. Bridgeport’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
Homework Answers
Investment accounted using FV -OCI -
OCI will be shown under reserves in the balance sheet.
Investment accounted using FVTPL -
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Bridgeport Corporation made the following purchases of
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during 2020, the first year in which Ayayai invested in equity
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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.
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preferred shares at $23.90 per share plus commission of
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No. Shares
Cost
Fair Value
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900
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1.
On January 15, purchased 8,100 shares of Nirmala Corp.’s common
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2.
On April 1, purchased 4,500 shares of Oxana Corp.’s common
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Investment
No. Shares
Cost
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