In 2020, Pronghorn Limited purchased shares of Gurvir Corp. at a cost of $52,700. This was the first time the company had ever acquired an investment to be accounted for at fair value through other comprehensive income (FV-OCI). At December 31, 2020, the Gurvir Corp. shares had a fair value of $43,500. Pronghorn Limited’s income tax rate is 30%. Assume that any gains that are ultimately realized on the sale of the Gurvir Corp. shares will be taxable as ordinary income when the gains are realized.

Prepare the necessary journal entries to record the unrealized loss and the related income taxes in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
December 31, 2020	enter an account title to record fair value adjustment	enter a debit amount	enter a credit amount
	enter an account title to record fair value adjustment	enter a debit amount	enter a credit amount
	(To record fair value adjustment)
December 31, 2020	enter an account title to record deferred taxes on fair value adjustment	enter a debit amount	enter a credit amount
	enter an account title to record deferred taxes on fair value adjustment	enter a debit amount	enter a credit amount
	(To record deferred taxes on fair value adjustment)

SHOW LIST OF ACCOUNTS

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Prepare the statement of comprehensive income for Pronghorn Limited, beginning with the line for net income of $64,500. Assume Pronghorn Limited reports under IFRS.

Pronghorn Limited Statement of Comprehensive Income choose the accounting period For the Year Ended December 31, 2020December 31, 2020For the Month Ended December 31, 2020
select a comprehensive income item Other Comprehensive Income Income Before Income Tax Unrealized Loss on FV-OCI Investments Comprehensive Income / (Loss)Deferred Tax Liability Deferred Tax Benefit Net Income / (Loss)Current Income Tax Benefit Deferred Tax Asset				$ enter a dollar amount
select an opening section name Deferred Tax Benefit Other Comprehensive Income Income Before Income Tax Comprehensive Income / (Loss)Deferred Tax Liability Unrealized Loss on FV-OCI Investments Net Income / (Loss)Deferred Tax Asset Current Income Tax Benefit :
select a comprehensive income item Deferred Tax Benefit Comprehensive Income /(Loss) Net Income /(Loss) Other Comprehensive Income Unrealized Loss on FV-Co-investment's Current Income Tax Benefit Deferred Tax Asset Deferred Tax Liability Income Before Income Tax		$enter a dollar amount
select between addition and deduction Less Add : select a comprehensive income item  Deferred Tax Asset Deferred Tax Liability Deferred Tax Benefit income Before Income Tax Net Income / (Loss)Comprehensive Income / (Loss)Other Comprehensive Income Current Income Tax Benefit Unrealized Loss on FV-OCI Investments		enter a dollar amount		enter a subtotal of the two previous amounts
select a closing name for this statement  Unrealized Loss on FV-OCI Investments Comprehensive Income / (Loss)Current Income Tax Benefit Other Comprehensive Income Deferred Tax Asset Deferred Tax Liability Income Before Income Tax Net Income /(Loss)Deferred Tax Benefit

Answer rating: 100% (QA)

As Gurxit Corps fair value is lesser than the purchase cost there will be unr... View the full answer