InvestCo Ltd. (ICL) is a publicly accountable enterprise that owns a number of investments in debt and

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Question:

InvestCo Ltd. (ICL) is a publicly accountable enterprise that owns a number of investments in debt and equity securities of other companies. ICL, whose year end is December 31, is a passive investor.

When required, ICL updates its investments to fair value at its year end. ICL elects not to reclassify reserves (AOC!) to retained earnings upon derecognition of investments in equity securities at FVOCI-elect.

All interest and dividend payments were received on the scheduled payment dates.

While the resulting journal entries will all be entered to the nearest dollar. ICL rounds all dollar-based calculations to the nearest whole cent (for example, $21.46) and percentages to two decimal places (for example, 13.41%). You should do likewise in your supporting calculations.

Details of ICL's investment dealings for its 20X3 and 20X4 fiscal years are as follows:

January 1, 20X3

(i) ICL paid $4,200 to its investment dealer to purchase 300 common shares of Able Ltd. and classified this investment at fair value through profit or loss (FVPL).

(ii) ICL paid $1,850 to its investment dealer to purchase 100 preferred shares of Baker Corp. and irrevocably classified this investment at fair value through other comprehensive income (FVOCI-elect). The preferred shares each pay a dividend of $0.75 ($75 total) annually on October 31.

(III) ICL paid $9,549 for a $10,000, 4.5% coupon bond issued by Charlie Inc. that pays Interest on June 30 and December 31 each year. The bond matures on December 31, 20X7. ICL classified this investment at FVPL.

(Iv) ICL paid $14,133 for a $15,000, 5.0% coupon bond issued by Devon Corp. that pays interest on June 30 and December 31 each year. The bond matures on December 31, 20X8. ICL classified this investment at FVPL.

(v) ICL paid $20,505 for a $20,000, 6.0% coupon bond issued by Erin Ltd. that pays interest on June 30 and December 31 each year. The bond matures on December 31, 20X8. ICL classified this investment at fair value through other comprehensive income (FVOCI).

(vi) ICL paid $28,947 for a $30,000, 5.0% coupon bond issued by Frank Corp. that pays Interest on June 30 and December 31 each year. The bond matures on December 31, 20X6. ICL classified this investment at amortized cost.

(vii) ICL paid $39,828 for a $40,000, 5.5% coupon bond issued by Granger Ltd. that pays Interest on June 30 and December 31 each year. The bond matures on December 31, 20X7. ICL classified this investment at amortized cost.

October 31, 20X3

(viii) Able Ltd. declared and paid a $1-per-share dividend to its common shareholders.

December 31, 20X3

ix) The market value of the investments was as set out below:

Able Ltd.. . . . . . . . . . . . . . . . . $4,500

Baker Corp.. . . . . . . . . . . . . . $1,600

Charlie Inc.. . . . . . . . . . . . . . $9,885

Devon Corn.. . . . . . . . . . . . . $15,027

Bin Ltd.. . . . . . . . . . . . . . . . . $20,698

Frank Corp.. . . . . . . . . . . . . . $29,083

Granger Ltd.. . . . . . . . . . . . . ,$40,159

January 1, 20X4

(x) ICL reclassified its investment in Charlie Inc.'s bonds from FVPL to amortized cost.

(xi) ICL redassified its investments in Granger Ltd.'s bonds from amortized cost to FVOCI.

July 1, 20X4

(xii) ICL sold its investments for the prices set out below:

Able Ltd. . . . . . . . . . . . . . . . $4,900

Baker Corp. . . . . . . . . . . . . $1,800

Charlie Inc. . . . . . . . . . . . . $9.975

Devon Corn. . . . . . . . . . . . . $14,398

Erin Ltd. . . . . . . . . . . . . . . . $19,842

Frank Corp. . . . . . . . . . . . . . $30,042

Granger Ltd. . . . . . . . . . . . . $39,785

Required:

Record all journal entries pertaining to the purchase, income recognition, revaluation, reclassification and derecognition of the investments detailed in the question. Separate the journal entries into those required in 20X3 and those required in 20X4.

Ensure that the journal entries are dated and include a brief description of the pertinent details. Prepare a separate journal entry for each event and for each investment; supporting calculations are to be referenced or included in the description.