Pascale Corp. has the following securities (all purchased in 2014) in its investment ponfolio on December 31, 2014:
(1) 2,500 Anderson Corp. common shares, which cost $48,750
(2) 10,000 Munter Ltd. common shares, which cost $580,000
(3) 6,000 King Corp. preferred shares, which cost $255,000. Their fair values at the end of 2014 were as follows: Anderson Corp. $49,580; Munter Ltd. $569,500; and King Corp. $254,400.
In 2015, Pascale completed the following transactions:
1. On January 15, sold 2,500 Anderson common shares at S21 per share less fees of$2,150.
2. On April 17, purchased 1,000 Castle Ltd. common shares at $33.50 per share plus fees of $1,980.
The company adds transaction costs to the cost of acquired investments and deducts them from cash received on the sale of investments. On December 31, 2015, the fair values per share of the securities were as follows: Munter $61; King $40; and Castle S29. Pascale's accounting supervisor tells you that all these securities have fair values that can be readily determined, but the company is not likely to actively trade them. Management accounts for them using the fair value through other comprehensive income method without recycling.
(a) Prepare the entries for the sale of the Anderson Corp. investment on January 15, 2015.
(b) Prepare the entry to record the Castle Ltd. share purchase on Apri1 17, 2015.
(c) Calculate the unrealized gains or losses and prepare any required adjusting entry(ies) for Pascale Corp. on December 31,2015.
(d) Indicate how all amounts will be reported on Pascale's statement of financial position, statement of comprehensive income, and the changes in the accumulated other comprehensive income portion of the statement of changes in shareholders' equity for 2015.
(e) Pascale Corp.’s shareholders carefully watch the company's reported earnings per share (EPS). If Pascale used an accounting policy of FV-OCI with recycling and the company had 10,000 shares outstanding, would this make the EPS any different than it would be with the policy indicated above? If not, why not? If so, by what amount per share?

  • CreatedSeptember 18, 2015
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