Young & Price Ltd. is an investment management firm that had, at the beginning of the current year on January 1, 2018, a balance of $120,000 in its Held for Trading Investments account (using the fair value through profit or loss model) and a balance of $500,000 in its Investment in Associates account (using the equity method). At the end of the year, these account balances were $130,000 and $600,000, respectively. During the year, dividends of $60,000 were received from associates while $10,000 were received from held for trading investments. In addition, the company purchased investments in associates and held for trading investments for cash of $120,000 and $50,000, respectively. Also during 2018, the company received $45,000 when it sold investments held for trading that were carried at $30,000.
Instructions
(a) List the accounts that Young & Price will show on its 2018 income statement pertaining to its investments. Indicate where these accounts will appear on the income statement.
(b) Determine the balances in each of these accounts at December 31.