Question

The following information relates to the 2020 debt and equity investment transactions of Pina Colada Ltd., a publicly accountable Canadian corporation. All of the investments were acquired for trading purposes and accounted for using the FV-NI model, with all transaction costs being expensed. No investments were held at December 31, 2019, and the company prepares financial statements only annually, each December 31, following IFRS.

1.		On February 1, the company purchased Williams Corp. 12% bonds, at par value for $530,000, plus accrued interest. Interest is payable April 1 and October 1.
2.		On April 1, semi-annual interest was received on the Williams bonds.
3.		On July 1, 9% bonds of Saint Inc. were purchased. These bonds, with a par value of $190,000, were purchased at par plus accrued interest. Interest dates are June 1 and December 1.
4.		On August 12, 3,100 shares of Scotia Corp. were acquired at a cost of $58.00 per share. A 1% commission was paid.
5.		On September 1, Williams Corp. bonds with a par value of $106,000 were sold at 104.3 plus accrued interest.
6.		On September 28, a dividend of $0.53 per share was received on the Scotia Corp. shares.
7.		On October 1, semi-annual interest was received on the remaining Williams Corp. bonds.
8.		On December 1, semi-annual interest was received on the Saint Inc. bonds.
9.		On December 28, a dividend of $0.55 per share was received on the Scotia Corp. shares.
10.		On December 31, the following fair values were determined: Williams Corp. bonds 101.85; Saint Inc. bonds 97; and Scotia Corp. shares $61.50.

Answer 1

Part A

Williams Corp. bonds

Date	Account titles and explanation	Debit	Credit
February 1, 2019	FV-NI Investments	530000
	Interest Receivable ($530,000 X 12% X 4/12)	21200
	Cash		551200
April 1, 2019	Cash ($530,000 X 12% X 6/12)	31800
	Interest Receivable		21200
	Investment Income or Loss		10600
September 1, 2017	Cash (106,000 X 104.3% )+ (106,000 X 12% X 5/12)	115,858
	Investment Income or Loss		9858
	FV-NI Investments		106000
October 1, 2019	Cash	25440
	Investment Income or Loss ($424,000 X 12% X 6/12)		25440
December 31, 2019	Interest Receivable	12720
	Investment Income or Loss ($424,000 X 12% X 3/12)		12720
December 31, 2019	Investment Income or Loss	7844
	FV-NI Investments ((424000 *101.85%)- 424000)		7844

Part B

Saint Inc. bonds

Date	Account titles and explanation	Debit	Credit
July 1, 2019	FV-NI Investments	190000
	Interest Receivable ($190,000 X 9% X 1/12)	1425
	Cash		191425
December 31, 2019	Cash ($190,000 X 9% X 6/12)	8550
	Interest Receivable		1425
	Investment Income or Loss		7125
December 31, 2019	Interest Receivable	1425
	Investment Income or Loss [$190,000 X 9% X 1/12)		1425
December 31, 2019	Investment Income or Loss	5700
	FV-NI Investments ($190,000 - (190000*97/100)		5700

Part C

Scotia Corp. shares

Date	Account titles and explanation	Debit	Credit
August 12, 2019	FV-NI Investments (3,100 shares X $58)	179800
	Investment Income or Loss	1798
	Cash		181598
September 28, 2019	Cash	1643
	Investment Income or Loss (3,100 X $0.53)		1643
December 28, 2019	Cash	1705
	Investment Income or Loss ((3,100 X $0.55)		1705
December 31, 2019	FV-NI Investments ((3100*61.50) - 179800)	10850
	Investment Income or Loss		10850