Prepare entries to record the following non-strategic investment transactions of Arrowhead Investment Corporation. Analysis Component: If the
Question:
Prepare entries to record the following non-strategic investment transactions of Arrowhead Investment Corporation.
Analysis Component: If the fair value adjusting entry on December 31, 2020, were not recorded, what would the effect be on the income statement and balance sheet? Based on your understanding of GAAP, would it be better or worse to omit an investment loss than investment income? Explain.
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2020 Paid $69,980 to purchase a $69,000, two-year, 8% bond payable of Action Corporation dated March 1. Interest is paid quarterly beginning June 1. Management intends to actively trade bond purchases. Mar. Bought 2,450 common shares of Brandon Motors at $30.00. Apr. 16 Paid $47,968 to purchase a five-year, 5.5%, $49,000 bond payable of Collingwood Corporation. Interest is paid annually each April 30. May June Received a cheque from Action Corporation regarding quarterly interest. Brandon Motors' board of directors declared a dividend of $0.75 per share to shareholders of record on August 10, payable August 15. Aug. 15 Received the Brandon Motors dividend. Sept. Received a cheque from Action Corporation regarding quarterly interest. Purchased 25,900 Dauphin Inc. common shares at $3.20. 17 Sold the Brandon Motors shares at $31.90. Oct. 20 Dec. Received a cheque from Action Corporation regarding quarterly interest. Sold the Action Corporation bond at 101. Accrued interest on the Collingwood bond. The fair value of the equity security on this date was Dauphin, $3.50. The carrying value equalled the fair value for the Collingwood bond. 31 2021 Apг. 30 Received a cheque from Collingwood Corporation regarding annual interest.
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2020 Mar 1 Investment ActionBond 69980 Cash 69980 Purchased 2year 8 69000 bond payable to be held as aninvestment Apr 16 Investment Brandon Motors Sha...View the full answer
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Related Book For
Fundamental Accounting Principles Volume II
ISBN: 978-1260305838
16th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
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