Question: Octavia Corp prepares financial statements annually on December 31 its

Octavia Corp. prepares financial statements annually on December 31, its fiscal year end. At December 31, 2014, the company has the account Investments in its general ledger that contains the following debits for investment purchases, and no credits:
The fair values of the individual securities on December 31, 2014, were:
Chiang Corp. common shares (active stock market price) ......... $33,800
Government of Canada bonds ................... 105,900
Monet Corp. bonds ........................ 55,600
Note receivable ........................... 58,350
Instructions (Round amounts to the nearest dollar.)
(a) Prepare the entries necessary to correct any errors in the Investments account, assuming that the Government of Canada bonds were being managed for their yield to maturity, and that the Monet bonds were acquired with the hope of gaining from falling interest rates. The Chiang Corp. shares were acquired with the hope of ensuring the supply of raw materials from this company in the future. Octavia has adopted the recognition and measurement standards of IFRS 9 and tracks interest income only for investments accounted for at cost/amortized cost.
(b) Prepare the entries required to record any accrued interest, amortization of any premium or discount, and recognition affair values on December 31, 2014.
(c) During 2015, the following transactions took place:
1. The note was sold on February 1, 2015, for $59,600.
2. The Government of Canada bonds were sold on July 1, 2015, for $109,200 plus accrued interest. Prepare entries to record these transactions.
(d) Using the information from parts (a) and (b), assume that the note was not sold on February I, 2015, but instead was held until it matured. Provide the proper entry to record the disposal of the note at maturity.
(e) Assume that Octavia Corp. is a private entiry and applies ASPE. Identify which, if any, of your answers to parts (a) to (d) would change under this assun1ption. Explain briefly.
(f) Can Octavia management choose which standards to follow, or is it restricted by the type of company it is? Explain.

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