The investments of Commerce Co. Ltd. include 12,000 RadTek Ltd. common shares purchased on February 21, 2015,

Question:

The investments of Commerce Co. Ltd. include 12,000 RadTek Ltd. common shares purchased on February 21, 2015, for $16 per share. These shares were classified as held-for-trading investments. As at the December 31, 2015, balance sheet date, assume that the share price increased to $21 per share. As at the December 31, 2016, balance sheet date, assume that the share price declined to $20 per share. The investment was held through December 31, 2016.

a. Journalize the entries to record the adjustment of the RadTek Ltd. investment to fair value on December 31, 2015, and December 31, 2016.

b. Where is the unrealized holding gain or unrealized holding loss for held-for-trading investments disclosed on the financial statements?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...