Prepare the other comprehensive income section of statement

Reference no: EM132740410

Question - Schmidt Inc. (Schmidt), a publicly accountable entity, had the following investments as at its fiscal year ended December 31, 2018:

Company Type Classification Original cost Carrying value Fair value Yiruma Corp. Shares FVPL* $45,000 56,000 53,000 Croin Ltd. Shares FVPL* 26,000 45,000 58,000

Sitoland Co. Bonds FVOCI** 84,756 84,756 84,756

Stewart Inc. Shares FVOCI-elect 76,000 85,000 98,000

McLaugh Inc. Shares FVOCI-elect 65,000 58,000 50,000

*FVPL = fair value through profit or loss

**FVOCI = fair value through other comprehensive income

The Sitoland Co. bonds were purchased on December 31, 2018, with a face value of $80,000. The bonds mature on December 31, 2027, and pay interest semi-annually on June 30 and December 31 at 5% per annum.

Schmidt's policy is to transfer the net balance of accumulated other comprehensive income (AOCI) to retained earnings upon derecognition of FVOCI-elect.

The following transactions took place during 2019:

On January 16, Schmidt sold the Croin Ltd. shares for $62,000.

On March 15, Schmidt purchased shares of Cardall Inc. for $65,000. The shares are classified as FVPL.

On June 12, Schmidt sold the McLaugh Inc. shares for $45,000.

On October 23, Schmidt purchased shares of Klass Co. for $12,000. The shares are classified FVOCI-elect.

On December 31, the fair values of the investments on hand were as follows:

Company Fair value

Yiruma Corp. 61,000

Stewart Inc. 120,000

Sitoland Co. 82,400

Cardall Inc. 71,500

Klass Co. 13,500

Required -

a) Prepare the journal entries to record all of Schmidt's investment-related transactions for 2019.

b) Prepare the journal entries necessary to account for the total fair value adjustment of both the FVPL and the FVOCI investments on Schmidt's financial assets at December 31, 2019.

c) Assume that Schmidt's net income is $4,450,000 for the year ended December 31, 2019. Prepare the other comprehensive income section of the statement of comprehensive income for the year ended December 31, 2019.

Reference no: EM132740410

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