Mandalorian Inc. has the following financial assets during the financial year. Explain and make entries to show
Question:
Mandalorian Inc. has the following financial assets during the financial year. Explain and make entries to show how each asset should be recorded. ( 10 marks)
a) 100,000 shares of a listed entity purchased on 1st November 2019. Each share cost $5 to purchase and a fess of $0.25 per share was paid as a commission to a broker. The shares constitute less than 20% shareholding The fair value of each share at 31st December was $3.50. The entity declared a dividend of $2 per share and reported net income of $40,000 in 2019.
b) 200,000 shares of a listed entity purchased on 1st March 2019 for $500,000, incurring transaction costs of $40,000. The shares constitute less than 20% shareholding. The company acquired the shares as part of a long term strategy to realize the gains in the future. The fair value of the shares was $620,000 at 31st December. The listed entity declared a dividend of $2 per share and reported net income of $40,000 in 2019.
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello