Question: On 30 April 20X2 Marc Company purchased 4 000 shares of

On 30 April 20X2, Marc Company purchased 4,000 shares of Spencer Limited for $ 17 per share plus $ 400 in commission. In 20X2, the company received a $ 0.65 per share dividend, and the shares had a fair value of $ 16 per share at the end of the year. In 20X3, the dividend was $ 1.05 per share, and the fair value was $ 20 per share at the end of the year. In 20X4, the shares were sold for $ 18 per share less a $ 550 commission.

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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