Provide accounting journal entries to account for investment

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On 1 July 2018, Happy Ltd purchases 200,000 shares in Joyful Ltd at a price of $2 each. The transaction costs for the purchase are $1,000. On 30 June 2019 (Balance date), the closing market price for a share in Joyful Ltd is $2.5. The Investment in Joyful Ltd is not held for trading.

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Problem (a) Assume that Happy Ltd measures its share investments at fair value through profit or loss. Provide the accounting journal entries to account for the investment in Joyful Ltd shares as required by NZ IFRS 9, and disclose the financial asset and related gain or loss on fair value on financial statements for the year ending 30 June 2019.

Problem (b) Assume that Happy Ltd has made the election to account for its share investments at fair value through other comprehensive income. Provide the accounting journal entries to account for the investment in Joyful Ltd shares as required by NZ IFRS 9, and disclose the financial asset and related gain or loss on fair value on financial statements for the year ending 30 June 2019.

Reference no: EM132627974

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