BradClientCo is a new public company in the investment business and was formed January 1, 2021 with Cash and Common Share Capital of $4 million each as the only account balances. The following investment transactions took place in 2021:

1. On June 1, purchased $700,000 par value of 10% semi-annual (Feb 1 & Aug 31) PetroCanada bonds for 102.5 plus accrued interest. The bonds will be held to maturity on December 31, 2023.

2. On June 16, purchased 300,000 common shares of Hudson’s Bay Co. (“HBCo”) as a temporary investment for $0.75 per share plus $4,500 broker commission.

3. On October 1, purchased 25% of common shares of Pearl Island for $3 million and was given representation on the Board of Directors. On this date, Pearl Island had total tangible assets with a BV of $14.7 million and total liabilities of $9.6 million. All book values represented fair values except PP&E, which had a NBV of $6.75 million and FMV of $7.98 million, and 10 years of remaining useful life.

4. On November 1, purchased $200,000 par value of 8% BC Hydro Bonds for 97.5 plus accrued interest. The bonds will be held as a temporary investment; mature on December 31, 2024; and pay interest on March 1 and September 1.

5. On November1, HBCo paid $0.05 per share as cash dividend.

6. Pearl Island reported a loss of $475,000 in 2021, realized evenly throughout the year, and no dividends were declared.

7. On December 31, market values were identified as follows: PetroCanada Bonds 101.5, BradClientCo $88.50 per share, HBCo $0.62 per share, Pearl Island $41.00 per share, BC Hydro bonds $98.5.

REQUIRED

a) Prepare JEs and supporting calculations for all above transactions including those related thereto for year ended December 31, 2021.

b) Record subsequent sale of 100,000 HBCo shares on February 28, 2022 at $0.70 per share and $1,400 broker commission.

c) Describe similarities and differences in recording FV-OCI investments in bonds vs shares

Answer rating: 100% (QA)

Answer a JEs and supporting calculations for all above transactions including those related thereto for year ended December 31 2021 1 On June 1 purcha... View the full answer