FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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It is year 1, the White Caps Ltd.’s first year of operations. White Caps Ltd. had the following transactions regarding their investments:
May
1
Purchased 600 Jerry Co. common shares for $180 per share. This investment is classified as held for trading.
June
1
Purchased 1,000 bonds of Larry Inc. at $300 each. These bonds pay interest at a rate of 6%, paid semi-annually on November 30 and May 31. These bonds were also purchased for trading purposes.
July
1
Purchased 4,000 Barry Ltd. common shares for $210 per share. These shares represent 25% of the issued common shares of Barry ltd. Because of this investment, the directors of Barry Ltd. invited a White Caps Ltd. executive to sit on their board.
Sept.
1
Received a $3-per-share cash dividend from Barry Ltd.
Nov.
1
Sold 200 Jerry Co. common shares for $189 per share.
30
Interest on the Larry Inc. bonds was received.
Dec.
15
A $0.50-per-share cash dividend on Jerry Co. common shares was received.
31
As of this date, the following fair values and net income information was identified:
$165 per Jerry Co. share
$219 per Barry Ltd. share
$303 per Larry Inc. bond
Barry Ltd. reported net income for the year ended December 31, Year 1, of $300,000.
White Caps Ltd. uses the FVTPL (fair value through profit or loss method) when accounting for non-strategic investments, and the equity method when accounting for strategic investments. Record the above transactions for the dates May 1 to Dec 15 , Prepare all necessary adjusting entries on December 31st, Year 1 required to report the investments at their appropriate value and any accrued investment revenue
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