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Compute the balance in the investment account

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Question - Her Company purchased 22,000 common shares (20%) of Him Inc. on January 1, Year 4, for $374,000. Additional information on Him for the three years ending December 31, Year 6, is as follows:

 

Year

 

Year 4

Year 5

Year 6

Net Income

$220,009

247,500

264,000

Dividends Paid

$165,000

176,000

192,500

Market Value per Share at December 31

$18

20

23

On December 31, Year 6, Her sold its investment in Him for $506,000.

Required -

(a) Compute the balance in the investment account at the end of Year 5, assuming that the investment is classi?ed as (i) FVTPL (ii) Investment in associate (iii) FVTOCI.

(b) Calculate how much income will be reported in net income and other comprehensive income in each of Years 4, 5, and 6, and in total for the three years assuming that the investment is classi?ed as (i) FVTPL (ii) Investment in associate (iii) FVTOCI.

(c) What are the similarities and differences in your answers for the three parts of (b)?

Reference no: EM132557858

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