Question

In: Accounting

Task Ltd. has the following transactions in purchasing and selling the ordinary shares of Sugar Company:...

Task Ltd. has the following transactions in purchasing and selling the ordinary shares of Sugar Company:

15. Jul. 2018          Purchased 12,000 shares of Sugar Company @ $100 per share.

31. Dec. 2018         The fair value of the ordinary shares of Sugar Company is $160 per share.

15. Jan. 2019         Sold the 4,000 ordinary shares of Sugar Company @ $150 per share.

Required:

Task Ltd. classifies the investment in the ordinary shares of Sugar Company as financial assets at fair value through other comprehensive income in accordance with HKFRS 9. Prepare journal entries for Task Ltd. to record the above transactions for 2018 and 2019.

Solutions

Expert Solution

When the company's investments are available for sale purpose they are generally classified through other comprehensive income.

At each reporting period, the value of investment is marked to the market and any difference is classified as other comprehensive income in the equity section of balance sheet on financial asset.

Journal Entries will be as follows:


Related Solutions

Kathleen Ferrero is interested in purchasing the ordinary shares of Vespertine Pty Ltd which are currently...
Kathleen Ferrero is interested in purchasing the ordinary shares of Vespertine Pty Ltd which are currently priced at $39.96. The company expects to pay a dividend of $2.58 next year and expects to grow at a constant rate of 8 per cent. a What should the market value of the share be if the required rate of return is 14 per cent? b Is this a good buy? Why or why not?
Diann Ltd. had the following transactions pertaining to share investments. Feb. 1 Purchased 600 ordinary shares...
Diann Ltd. had the following transactions pertaining to share investments. Feb. 1 Purchased 600 ordinary shares of Ronn (2%) for £6,200. July 1 Received cash dividends of £1 per share on Ronn ordinary shares. Sept. 1 Sold 300 ordinary shares of Ronn for £4,300. Dec. 1 Received cash dividends of £1 per share on Ronn ordinary shares. Instructions: a. Journalize the transactions. b. Explain how dividend revenue and the gain (loss) on sale should be reported in the income statement.
Royal Park Ltd is an existing company that has issued previously 300,000 ordinary shares of $8...
Royal Park Ltd is an existing company that has issued previously 300,000 ordinary shares of $8 each and 100,000 5% preference shares of $15 each. On 1st January 2019, Royal Park Ltd offered to issue an additional 250,000 ordinary shares for $11, payable in two installments: $7 initially on application; $4 payable based on calls as required. Applications for 400,000 shares were received by the closing date of 30th January 2019. On 10th February 2019, shares were allotted, and a...
Royal Park Ltd is an existing company that has issued previously 300,000 ordinary shares of $8...
Royal Park Ltd is an existing company that has issued previously 300,000 ordinary shares of $8 each and 100,000 5% preference shares of $15 each. On 1st January 2019, Royal Park Ltd offered to issue an additional 250,000 ordinary shares for $11, payable in two installments: $7 initially on application; $4 payable based on calls as required. Applications for 400,000 shares were received by the closing date of 30th January 2019. On 10th February 2019, shares were allotted, and a...
1.      Ruwi Construction Company had the following transactions during June 2016. Transactions (1) Issued ordinary shares...
1.      Ruwi Construction Company had the following transactions during June 2016. Transactions (1) Issued ordinary shares in exchange for R.O.35,000 cash on June 1. (2) Purchased equipment for R.O.6,000 paying R.O.2,500 in cash and the remainder in the future. (3) Purchased supplies for R.O.2,200 on account. (4) Received a bill from Oman News for R.O.800 for advertising. (5) Received R.O. 10,500 in cash from customers for services provided. (6) Paid salaries of R.O. 2,100 to the company employees. (7) Billed...
Provide journal entries for the following transactions: 1. The Cheung Company issues 10 000 ordinary shares...
Provide journal entries for the following transactions: 1. The Cheung Company issues 10 000 ordinary shares for $30 per share. The investors are required to pay $12 on application, $10 on allotment and an $8 call. Applications are received by 1st January. Allotments are made on 14th January with all allotment money received by 30th January. The call was made on 1st May and payment was due by 14th May. On 14th May it was discovered that a holder of...
HIJ Ltd. has just issued a dividend of $1.25 per share on their ordinary shares that...
HIJ Ltd. has just issued a dividend of $1.25 per share on their ordinary shares that have a face value of $1.00. Dividends have been increasing at a rate of 4%pa and this trend is expected to continue for another year. After that the growth rate is expected to be 6%pa for three years before settling down into the long term growth rate of 5%pa. If the market requires a return of 12%pa on these shares: i. What is their...
CHOCO is a new firm that has raised £150,000 (book value) by selling ordinary shares. Management...
CHOCO is a new firm that has raised £150,000 (book value) by selling ordinary shares. Management plans to earn 20% rate of return on equity (ROE), which is more than the 15% rate of return in comparable risk investments. 50% of all the earnings will be re- invested in the firm. a) What will be the value of dividends and the growth rate for CHOCO? b) What will be CHOCO ratio of market value to book value? c) How would...
Task ? 6 Specification: Undertaking “A” owns 75% of ordinary shares of undertaking “B” that, in...
Task ? 6 Specification: Undertaking “A” owns 75% of ordinary shares of undertaking “B” that, in turn, owns 55% of ordinary shares of undertaking “C”. Undertaking “A” produces the Group’s consolidated financial statements.          Question: Should the consolidated financial statements disclose related party transactions in respect of intra-group transactions.
1. Soundbird Ltd has 600,000 ordinary shares on issue at 1 July 2019, which is the...
1. Soundbird Ltd has 600,000 ordinary shares on issue at 1 July 2019, which is the beginning of its reporting period. On 1 January 2020, it issued a further 600,000 ordinary shares for cash. On 1 March 2020, Soundbird Ltd repurchased 10,000 shares at fair value in a market transaction. Required: What is the correct weighted average number of shares to use in the earnings per share calculation for the year ended 30 June 2020? Show all your workings. 2.Rosy...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT