Harper Corporation had the following portfolio of investments at December 31, 2020, that qualified and were accounted for using the FV-OCI method:

Early in 2021, Harper sold all the Frank Inc. shares for $17 per share, less a 1% commission on the sale. On December 31, 2021, Harper?s portfolio consists of the following common shares:

Assume that Harper reports net income of $158,300 for its year ended December 31, 2021, and that the company follows a policy of capitalizing transaction costs. Realized gains and losses on equity investments are reclassified from accumulated other comprehensive income directly to retained earnings.

Instructions

a. What should be reported on Harper?s December 31, 2020 statement of financial position for this long-term portfolio?

b. What should be reported on Harper?s December 31, 2021 statement of financial position for these investments?

c. What should be reported on Harper?s 2021 statement of comprehensive income for the investments accounted for using the FV-OCI model? Prepare a partial 2021 statement of comprehensive income for Harper and provide an entry for classifying holding gains or losses to Retained Earnings on equity investments sold during 2021.

d. Assuming that comparative financial statements for 2020 and 2021 are presented in 2021, draft the footnote needed to fully disclose Harper?s transactions and investments.

e. Digging Deeper As a potential investor in Harper Corporation, explain what information the other comprehensive income portion of the statement of comprehensive income provides for you.

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Percent Interest Fair Value per Cost per Quantity 2,000 shares 5,000 shares 4,000 shares Share Share $16 Frank Inc. Ellis Corp. Mendota Ltd. 8% $1 23 31 19 14% 2% 24 Percent Fair Value per Cost Çost $23 31 25 Quantity Share Ellis Corp. Mendota Ltd. 5,000 shares 4,000 shares 2,000 shares Interest 14% 14% 2% $28 23 Kaptein Inc. 1% 22