Cabe Entity purchased equity instruments on 3/1/20X7 for $645,000 and classified them as at FVTOCI. On...

Cabe Entity purchased equity instruments on 3/1/20X7 for $645,000 and classified them as at FVTOCI. On 12/31/20X7, the fair value of the equity instruments was $650,000. CE sold them on 1/1/20X8. Where is the unrealized gain on the instruments as of 12/31/X7 recorded? Describe what adjustments must be made when the equity instruments are sold.

Expert Solution

Journal entry when equity instrument is sold
Cash	650,000
Equity instrument		645,000
Increase in Fair value		5,000
(Equity instrument sold)
Increase in Fair value	5,000
FVOCI		5,000
(Gain recoreded in OCI)

So the unrealized gain will be recorded on Other comprehensive income(OCI)
Adjustments made are shown above

ekkarill92 answered 2 years ago

Entity A purchased a property (Land and Building) for $5,000,000 on 1 July 2017. Entity A...

Entity A purchased a property (Land and Building) for $5,000,000 on 1 July 2017. Entity A paid 60% by a cheque on 1 July 2017 and the balance was settled on 1 August 2017 through a bank transfer. The value of the land was $500,000 and the buildings $4,500,000. The expected useful life of the building is 50 years without any residual value. On 30 June 2019, the property was revalued to $7,562,208 (land $980,208 and buildings $6,582,000). On 30...

1. Identify and explain the risk associated with debt instruments and equity instruments. 2. Discuss in detail...

1. Identify and explain the risk associated with debt instruments and equity instruments. 2. Discuss in detail the functions performed by financial intermediaries (i.e. why do they exist) and the problems they have to address.

State two features regarding debt and equity instruments that result in equity instruments having a higher...

State two features regarding debt and equity instruments that result in equity instruments having a higher cost of capital The Australian Treasury is issuing 10-year bonds that have a face value of $100 paying half-yearly coupons at 4% p.a. The bonds mature at par. Spencer purchases the bonds at the issue date that are priced at a yield to maturity of 5.2% p.a. Calculate the size of each coupon payment giving your answer correct to the nearest cent. The Australian...

On January 1, 20x7, Bedor Inc. purchased a piece of equipment at a cost of $56987,...

On January 1, 20x7, Bedor Inc. purchased a piece of equipment at a cost of $56987, which included freight charges of $9602. It cost the company $2875 to install the equipment. After the installation of the piece of equipment, Bedor Inc. had to pay an additional $2040 for new insurance. What is the capitalized cost of the piece of equipment? a. $50260 b. $61902 c. $59862 d. $47385

3. On November 19, 20x7, Lassen Company purchased 30,000 shares of JCN Corporation stock for $480,000,...

3. On November 19, 20x7, Lassen Company purchased 30,000 shares of JCN Corporation stock for $480,000, and 10,000 shares of Canoga Corporation stock for $250,000. Lassen's management intends to hold all 40,000 shares for a short period of time. On December 31, 20x7, the price of JCN's stock was $13 per share, and the price of the Canoga stock was $30 per share. Finally, on January 27, 20x8, Lassen sold all 10,000 shares of Canoga stock for $320,000. In the...

On June 30, 2015, Pacman Ltd. purchased $1,000,000 of 10 year 4% bonds and classified them...

On June 30, 2015, Pacman Ltd. purchased $1,000,000 of 10 year 4% bonds and classified them as FVTPL. The market rate at time of purchase was 5%. Interest is paid semi-annually on June 30 and December 31. Pacman follows IFRS 9. On December 31,2015, the market rate was 4.6%. On June 30, 2016, Pacman sold all the bonds for $940,000 plus accrued interest. a. Calculate the purchase price of the bonds. b. Prepare a bond amortization table for the first...

Explain the following theories of Equity: 1. entity theory 2. fund theory 3. commander theory 4....

Explain the following theories of Equity: 1. entity theory 2. fund theory 3. commander theory 4. enterprise theory

Bluth, Inc., purchased 100% of the common shares of Horten for $280,000 on January 1, 20X7....

Bluth, Inc., purchased 100% of the common shares of Horten for $280,000 on January 1, 20X7. Horten's balance sheet just before the acquisition was as follows ($ in thousands): BALANCE SHEET: Cash $100 Net fixed assets $ 190 Total assets $290 Liabilities $200 Stockholders' equity $90 Total L&SE $290 Requirement 1: Compute the amount of goodwill Bluth would recognize on this purchase. Where would this goodwill appear on Bluth's financial statements? Requirement 2: Bluth's 20X7 net income from all operations...

1.) On December 31, 20x7, Corp. A (created on January 1, 20x7), which uses the allowance...

1.) On December 31, 20x7, Corp. A (created on January 1, 20x7), which uses the allowance method to record bad debts expense, estimates that is will eventually incur $5,400 of bad debt expense on its December 31, 20x7 accounts receivable total of $226,000. Record the end-of-year journal entry to record bad debt expense for the year. 2.) On May 11, 20x8, Corp. A learns that customer, Frank Smith, has died. Prepare a journal entry to write of Frank’s $415 account...

Capital Budgeting Problem 1 Precision Instruments operates a machine that was purchased at a cost of...

Capital Budgeting Problem 1 Precision Instruments operates a machine that was purchased at a cost of $580,000 three years ago. Its current market value is $240,000 less than the original purchase price. An improved version of the equipment is now available for $600,000. The firm has spent $20,000 on a study examining the feasibility of replacing the old machine with the new and found that the new machine is capable of performing the same functions as the old one. Both...

Question