MacAskill Corp has the following portfolio of securities acquired for
MacAskill Corp. has the following portfolio of securities acquired for trading purposes and accounted for using the fair value through net income model at September 30, 2014, the end of the company~ third quarter:
On October 8, 2014, the Yuen shares were sold for $4.30 per share. On November 16, 2014, 3,000 common shares of Patriot Corp. were purchased at 544.50 per share. MacAskill pays a 1% commission on purchases and sales of all securities. At the end of the fourth quarter, on December 31, 2014, the fair values of the shares held were as follows:
Monty $106,000; Patriot $122,000; and Oakwood $203,000. MacAskill prepares financial statements every quarter. Assume MacAskill follows IFRS 9 and does not recognize dividends and other investment income accounts separately.
(a) Prepare the journal entries to record the sale, purcilase, and adjusting entries related to the portfolio for the fourth quarter of 2014.
(b) Indicate how and where the investments would be reported on the December 31, 2014 statement of financial position.
(c) Under what conditions might you recommend that the portfolio accounted for at FV-NI be reported somewhere other than where you indicated in part (b)?
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