Answered: Entity A invested in 38,600 shares of a…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 2MC: During 2021, Anthony Company purchased debt securities as a long-term investment and classified them...

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Question

Entity A invested in 38,600 shares of a listed company on 1 October 2019 at a cost of $3.95 per share.

On 31 December 2019, the shares have a market value of $3.45.

Entity A is not planning on selling these shares in the short term and elects to hold them as Fair Value through Other Comprehensive Income.

REQUIRED:

(1) Measure the amounts of the financial asset recognised in the Statement of Financial Position as at 31 December 2019.

(2) Measure the amounts recognised in the Statement of Profit or Loss for the financial asset of the year 2019.

(3) Measure the amounts of the Fair Value Reserve recognised in the Statement of Financial Position as at 31 December 2019

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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