Castlegar Ltd. had the following investment portfolio at January 1, 2017:

During 2017, the following transactions took place:
1. On March 1, Josie Corp. paid a $2 per share dividend.
2. On April 30, Castlegar sold 300 shares of Asher Corp. for $10 per share.
3. On May 15, Castlegar purchased 200 more Earl Corp. shares at $16 per share.
4. At December 31, 2017, the shares had the following market prices per share: Earl Corp. $17; Josie Corp. $19; and Asher Corp. $8.
During 2018, the following transactions took place:
5. On February 1, Castlegar sold the remaining Asher Corp. shares for $7 per share.
6. On March 1, Josie Corp. paid a $2 per share dividend.
7. On December 21, Earl Corp. declared a cash dividend of $3 per share to be paid in the next month.
8. At December 31, 2018, the shares had the following market prices per share: Earl Corp. $19 and Josie Corp. $21.
Instructions
(a) Assuming that Castlegar Ltd. is a publicly accountable enterprise that applies IFRS 9 and accounts for its investment portfolio at FV-OCI (with no recycling), prepare journal entries to record all of the 2017 and 2018 transactions and year-end events.
(b) Prepare the relevant parts of Castlegar Ltd.'s 2018 and 2017 comparative statements of financial position, statements of comprehensive income, and statements of changes in shareholders' equity (accumulated other comprehensive income portion), where applicable, to show how the investments and related accounts are reported.
(c) Assume that Castlegar Ltd. is a private enterprise that applies ASPE and accounts for its investment portfolio at cost (that is, the securities do not have actively traded market prices). Determine the amount by which the company's 2017 net income and 2018 net income would differ from the amounts reported under the assumptions in parts (a) and (b). Explain your results.
(d) Refer to your answers to parts (b) and (c). From an investor's perspective, what additional relevant information, if any, is provided in the financial statements under part (b) that would not be available in financial statements pre- pared under the method used in part (c)?

Transcribed Image Text:

Investment Earl Corp. Josie Corp. Asher Corp. Quantity 1,000 900 500 Cost per Share $15.00 20.00 9.00 Fair Value at Dec. 31, 2016 $11.50 16.50 7.20