Question: At the end of 20X9 Canfrax Corp Limited reported an

At the end of 20X9, Canfrax Corp. Limited reported an unrealized loss on Comet Co shares of $ 24,600 in earnings. Investments were reported on the statement of financial position as follows:
Long- term assets: investments:
Star Co. common shares .......$ 1,370,100
Comet Co. common shares........ 434,700
Shareholders’ equity; OCI reserve account:
Star Co. shares, unrealized gain ... $ 150,300

1. Why are the investments classified as long term? Under what circumstances would they be classified as current?
2. What do the values reported as long- term investments represent? How is this value measured?
3. How have the Star Co. shares been classified? Explain. What criteria must be met for them to be classified in this way? Could the investment have been classified as AC? Explain.
4. Shares were purchased in 20X9. What price would originally have been paid for the Star Co. shares? Comet Co. shares?
5. If the Star Co. shares are sold for $ 1,500,000, and the Comet Co. shares are sold for $ 435,000, what gain or loss is included in earnings?

View Solution:

Sale on SolutionInn
  • CreatedFebruary 17, 2015
  • Files Included
Post your question