Question

During January 2014, Ka- Shing Company purchased shares of the following companies as a non-current investment:
Subsequent to acquisition, the following data were available:
Required:
1. What accounting method should be used for the investment in Q Corporation’s common shares? R Corporation’s preferred shares? Why?
2. Prepare the journal entries to record the following events for each year using parallel columns (if no entry is required, explain why):
a. Purchase of the investments.
b. Income reported by Q and R Corporations.
c. Dividends received from Q and R Corporations.
d. Fair value effects at year- end.
3. For each year, show how the following amounts should be reported on the financial statements of Ka-Shing Company:
a. Non- current investment.
b. Shareholders’ equity— net unrealized gains and losses.
c. Investment income.


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  • CreatedAugust 04, 2015
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