On 31 December 20X6, Kirwan Company's investments in equity securities were as follows:

Required:
1. Explain what the carrying value for each investment represents.
2. What was the original cost of the FVTOCI investment?
3. Kirwan reclassified the AC investment to a FVTPL investment on this date, when its fair value was $ 316,000. Explain how the reclassification will be reflected in the financial statements. How is fair value established?
4. Kirwan reclassifies the Orr common shares as a FVTPL investment when the fair value is $ 1,568,500. What accounting is required for this reclassification?
5. What is the rule for classifications in and out of the FVTOCI category?

Transcribed Image Text:

AOCI: Equity Reserve: Holding Gains and Losses (Cumulative) Value FVTOCI investment $34,700 loss FVTPL investment AC investment Significant-influence investment Orr Ltd. Goldhar Corp., common shares McKinley Corp, common shares Walsh Ltd. 7% bonds, $300,000 par value $ 920,000 669,700 297,000 1,456,000