Question

Marigold Corporation, a Canadian-based international company that follows IFRS 9, has the following securities in its portfolio of investments acquired for trading purposes and accounted for using the FV-NI method on December 31, 2016:

Investments		Carrying Amount (before adjustment)				Fair Value
1,800 shares of David Jones Inc., common			$82,000			$77,000
6,000 shares of Hearn Corp., common			240,000			233,400
390 shares of Alessandro Inc., preferred			66,300			68,800
			$388,300			$379,200

In 2017, Marigold completed the following securities transactions:

Mar. 1		Sold the 1,800 shares of David Jones Inc. common at $38.14 per share, less fees of $400.
Apr. 1		Bought 500 shares of Oberto Ltd. common at $75 per share, plus fees of $1,400.

Marigold Corporation’s portfolio of trading securities appeared as follows on December 31, 2017:

Investments		Original Cost			Fair Value
6,000 shares of Hearn Corp., common		$240,000			$234,600
500 shares of Oberto Ltd., common		37,500			35,500
390 shares of Alessandro Inc., preferred		66,300			63,800
		$343,800			$333,900

Assume that the company does not recognize and report dividends and other components of investment gains and losses separately.

1. Prepare the Marigold Corporation general journal entry to record the adjusting entry for December 31, 2016. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

​2. Prepare the Marigold Corporation general journal entry to record the sale of the David Jones Inc. shares. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

​3. Prepare the Marigold Corporation general journal entry to record the purchase of the Oberto Ltd. shares. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

4. Prepare the Marigold Corporation general journal entry to record the adjusting entry for December 31, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Date	Account titles and explanation	Debit	Credit
Dec 31, 2016	Unrealized Holding Gain or Loss—Income.	$          9,100
	Fair Value Adjustment (trading).		$          9,100
Mar 1, 2017	Cash [(1,800 X $38.14) – $400].	$        68,252
	Loss on Sale of Investments.	$        13,748
	Equity Investments (trading).		$        82,000
Apr 1, 2017	Equity Investments (trading)
	[(500 X $75) + $1,400].	$        38,900
	Cash		$        38,900
Dec 31, 2017	Unrealized Holding Gain or Loss—Income.	$              800
	Fair Value Adjustment (trading).		$              800
	Investments	Original Cost	Fair Value	Unrealized Gain(Loss)
	Hearn Corp., common	$240,000	$234,600	$           (5,400)
	Oberto Ltd., common	37,500	35,500	$           (2,000)
	Alessandro Inc., preferred	66,300	63,800	$           (2,500)
	Total portfolio	$343,800	$333,900	$           (9,900)
	Previous fair value adjustment—Cr.			$           (9,100)
	Fair value adjustment—Cr.			$              (800)