Question

London Ltd. reported the following transactions and information regarding the shares of Dolma Corp:
• 15 October 20X2, purchased 3,000 shares at $ 42 per share plus $ 1,200 commission.
• 1 December 20X2, received $ 0.50 per share cash dividend.
• 31 December 20X2, fair value is $ 38 per share.
• 1 December 20X3, received $ 0.50 per share cash dividend.
• 31 December 20X3, fair value is $ 45 per share.
15 November 20X4, sold 1,000 shares at $ 41 per share less $ 450 commission.
• 1 December 20X4, received $ 0.50 per share cash dividend.
• 31 December 20X4, fair value is $ 40 per share.

Required:
1. Show the amounts and accounts that would be reported in earnings and the statement of financial position for 20X2, 20X3, and 20X4 if the company uses the:
a. Cost method. b. FVTPL method.
c. FVTOCI method; realized amounts are transferred to retained earnings.
2. Explain when each of the above methods would be appropriate for this investment.



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  • CreatedFebruary 17, 2015
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