Reference no: EM132462246
At December 31, 2020, the equity investments of Bramble Inc. that were accounted for using the FV-OCI model without recycling were as follows:
Investment Cost and Carrying Amount Fair Value Unrealized Gain (Loss)
Ahn Inc. $175,500 $149,800 $(25,700)
Burnham Corp. $122,600 $140,100 $17,500
Chi Ltd. $ 73,000 $ 75,100 $ 2,100
Total $371,100 $365,000 $(6,100)
- Because of a change in relationship with Ahn Inc., Bramble Inc. sold its investment in Ahn for $153,700 on January 20, 2021.
- No other investments were acquired or sold during 2021; however, a dividend of $1,300 was received from Burnham Corp. in June. At December 31, 2021, the fair values of Burnham and Chi shares were $154,800 and $72,200, respectively.
Requirement :
Question 1) Prepare the entry to adjust the portfolio of investments to fair value at December 31, 2020.
Question 2) Prepare the presentation of all investment-related accounts on the statement of financial position at December 31, 2020.
Question 3) Indicate what accounts and amounts would be reported on the statement of comprehensive income for the year ended December 31, 2020, and where each would be reported.
Question 4) Prepare the journal entries for the 2021 sale of the investment in Ahn Inc., including reclassifying holding gains or losses to retained earnings and for the dividend received from Burnham Corp.:
a) To adjust to fair value at date of disposal.
b) To record disposal.
c) To reclassify holding loss.