During 20X2, Morran Company purchased shares in two corporations and debt securities of a third. The share investments are classified as FVTOCI and the bond investment is FVTPL. Transactions in 20X2 include:
a. Purchased 3,000 of the 100,000 common shares outstanding of Front Corporation at $ 31 per share plus a 4% brokerage fee.
b. Purchased 10,000 of 40,000 outstanding preferred shares (nonvoting) of Ledrow Corpo-ration at $ 78 per share plus a 3% brokerage fee.
c. Purchased an additional 2,000 common shares of Front Corporation at $ 35 per share plus a 4% brokerage fee. d. Purchased $ 400,000 par value of Container Corporation, 9% bonds at 100 ( par) plus accrued interest. The purchase is made on 1 November; interest is paid semi- annually on 31 January and 31 July. The bond matures on 31 July 20X7.
e. Received $ 4 per share cash dividend on the Ledrow Corporation shares.
f. Interest is accrued at the end of 20X2.
g. Fair values at 31 December 20X2: Front shares, $ 34 per share; Ledrow, $ 82 per share; Container Corporation bonds, 98.

1. Give the entries in the accounts of Morran Company for each transaction.
2. Give the items and amounts that would be reported in 20X2 earnings, and all amounts on the statement of financial position.
3. Repeat requirements 1 and 2, assuming that all the investments are FVTPL investments. Note that for FVTPL investments, all acquisition fees are expensed immediately.

  • CreatedFebruary 17, 2015
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