User Account

All Pages

Make all journal entries relating to the investment

Assignment Help Financial Accounting
Reference no: EM132692445

Radical Resources Inc. (Radical), which has a December 31st year-end, is a mining company that recently raised $5,000,000 from a public financing. The Board of Directors has instructed its CFO to invest up to $4,000,000 in investments that it has designated as fair market investments through Profit and Loss(FVTPL).

On the advice of the company's investment advisor, the following shares were purchased in October 2019:

Investment. Share. Total Cost
Giggle Inc. 40,000. $1,000,000
Mayflower Bank. 30,000. $600,000
Samex Mines Ltd. 100,000. $100,000
?
In 2020, Radical completed the following transactions:

  • January 15 50,000 shares of Samex Mines Ltd. were purchased for $125,000.
  • February 27 Radical received cash dividends of $30,000 from its investment in Mayflower Bank.
  • March 22 6,000 shares of Mayflower Bank were sold at $95 per share
  • June 17 85,000 shares of Lexus Resources were purchased at $17.50 per share
  • September 25 125,000 shares of Samex Mines Ltd. were sold for net proceeds (i.e. after commissions) for $300,000. (For the purposes of determining the cost of shares sold, use the weighted average cost).
  • As part of its banking arrangement, the company pays no commission on the purchase of shares but is charged a 1.5% commission on the sale of all investments.

Market Price of investments - presented on a per share basis.
Investment. Jan 01, 2019. Dec 31, 2019. Dec 31, 2020
Giggle Inc.       $20.00.            $42.00.    $ 57.00
Mayflower Bank.  27.00.          13.00.         42.00
Samex Mines Ltd. 1.50.        2.00.           0.75
Lexus Resources. 9.00.       11.0.0.        17.00

Question 1. all journal entries relating to these investments, which are accounted for as fair value through profit and loss (FVTPL) for 2019.

Question 2. all journal entries relating to these investments, which are accounted for as fair value through profit and loss (FVTPL) for 2020.

Question 3. Briefly discuss why investments designated as fair value through profit and loss (FVTPL) are valued at current market value while other assets such as property, plant and equipment remain at cost and are not adjusted to fair market value.

Reference no: EM132692445

Questions Cloud

Explain the role of marketing : Marketing Planning Report - Explain the role of marketing and how it interrelates with other functional units of an organisation.
Adaptive structures effective organization structures : When and why? Also, are both hierarchical and adaptive structures effective organization structures for particular situations? When and why?
Explain why the company was able to issue the bonds : Explain why the company was able to issue the bonds for only $9,594,415 rather than for the face amount of $10,000,000
Determine social determinants : What economic tool could researchers utilize to determine social determinants? Explain what the theory behind this tool?
Make all journal entries relating to the investment : Make all journal entries relating to these investments, which are accounted for as fair value through profit and loss (FVTPL) for 2019.
Why feedback is important to a business and customers : Describe the reason why this feedback is important to a business and customers
Describe the way the form will be promoted : Describe the way the form will be promoted and distributed to customers
Journalize the entries to record the selected transactions : The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions for the current year
Find which financial statements prepared by non-reporting : Find Which Financial statements prepared by non-reporting entities are known as? General purpose financial statements. / Special purpose financial statements

Reviews

Write a Review

Financial Accounting Questions & Answers

  What is the equivalent annual cost of the equipment

Future Semiconductor is considering the purchase of photolithography equipment that will cost $3 million. The equipment requires maintenance of $5,000 at the end of each of the next five years. After five years it will be sold for $500,000. Assume a ..

  Make common size income statements for price company

Make common size income statements for Price Company, a sole proprietorship, for the two years shown as above by converting the dollar amounts.

  Find what required rate of return on carpe diem limited

The market price of the common stock at the beginning of 2020 is $1,000. What is the required rate of return on Carpe Diem Limited's common stock?

  Determine which journal entry reflects the transaction

Which of these transactions would produce $10,000 of expenses in December? (check all that apply) "there's more than one answer"

  Prepare a complete statement of cash flows

Prepare a complete statement of cash flows using the indirect method and disclose any noncash investing and financing activities and supplemental cash flow information in the manner discussed in the textbook and the powerpoint. If you don't know wh..

  Evaluate any damaging financial and ethical repercussions

Evaluate any damaging financial and ethical repercussions of failure to include the inventory write-downs in the financial statements.

  Definition of income according to the conceptual framework

Using the definition of "Income" according to the Conceptual Framework, discuss the accountant's treatment of the purchase of the carpet.

  Discuss unadjusted trial balance office equipment is equal

unadjusted trial balance office equipment is equal to 6300 and art equipment is 1800 and it all placed in service at november

  Reported net income for the period

Jackson Consulting, Inc. had the following accounts and balances at December 31: Account Debit Credit Cash $20,000 Accounts Receivable 6,000 Prepaid Insurance 1,500 Supplies 5,000 Accounts Payable $500 Common Stock 16,200 Dividends 1,000 Service Reve..

  How will we motivate and empower our employees

How do we provide information systems with updated technology? How will we motivate and empower our employees?

  Costing system of rather than job-order costing system

For which situation(s) below would an organization be more likely to use a process costing system of rather than a job-order costing system? Powell’s Courier Service recorded a loss of $9,000 when it sold a van that originally cost $84,000 for $15,00..

  What will be the balance reported as a liability

On January 1, 2016, Packard Corporation leased equipment to Hewlitt Company. The lease term is 12 years. The first payment of $459,000 was made on January 1, 2016. Remaining payments are made on December 31 each year, beginning with December 31, 2016..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd