On 22 May 20X5, Friedland Ltd. purchased 52,000 shares of Gerstan Ltd. for US$13.40 per share, plus US$2,000 in commissions and fees. The shares were purchased from a broker on account, with later cash payment. On 22 May 20X5, the exchange rate was US$1 = Cdn$1.07. The shares were held as a FVTPL investment. The account was settled with the broker on 3 September 20X5, when US$1 = Cdn$1.12.

On 18 June 20X5, Friedland bought a US$1,450,000 six year bond at par value, when the exchange rate was US$1 = Cdn$1.10. Friedland paid cash on the acquisition date. There was no accrued interest. Management classified this bond as a FVTPL investment.

At 31 December 20X5, Gerstan shares had a quoted fair value of US$15 per share, the bonds were trading at 106, and the exchange rate was US$1 = Cdn$1.05.

Required:

1. Provide the journal entry to record purchase of the bond on 18 June.

2. Provide journal entries to record the acquisition of the Gerstan shares on 22 May, and payment to the broker in September.

3. Provide the 31 December 20X5 adjustment that must be made to reflect fair values and/or exchange rate changes. No interest accrual need be made. Explain the components of the Gerstan adjustment.