In: Accounting
Company X has purchased 1,000 shares of Company Y at a cost of OMR 5 per share on 1st January 2018. Transaction cost Total OMR 80. Company X has classified these shares as available for sale investment. On December 31, 2018 fair value of company Y shares has increased to OMR 7 per share. On March 1, 2019, Company X sells all the share OMR 8 per share and the transaction cost total is OMR 100. Which of the following is the correct journal entry for sale of the investment?
During sale,following entry will be passed:
Additonally, let us try to understand how the balance of OMR 7000 came in to close the Shares A/c.
Notice that the loss is characterized as”unrealized.” This term is used to describe an event that is being recorded (“recognized”) in the financial statements, even though the final cash consequence has not yet been determined. Hence, the term “unrealized.”