B) It also owns two financial asset investments in the shares of two listed companies. The...

B) It also owns two financial asset investments in the shares of two listed companies. The details are given below: Investment in company

A- Invested in shares on 1st June 2019 at a cost of RO 60,000 for the purpose of sale. It’s fair value at the end of the year is RO50,000 Investment in company B- Invested RO 20,000 to hold forever. Its fair value on 31st December 2019 is RO 25,000 a. What are the amounts that will appear in the Financial Statements of the company?

C) An investment which is classified as held for sale is currently valued under the revaluation model is RO 700,000. Its latest fair value is RO 600,000 and the assessed costs for selling the asset are RO10,000. a. Illustrate how this transaction would be recorded in the financial statements.

D) The phoenix group held 100,000 shares of XYZ ltd on 30th September 2019 costing RO 420,000 and spent RO 10,000 for the purchase. The shares were purchased for trading. On 31st December 2019, the fair value of a share was RO 5.10.

a. Show how it will appear in the financial statements of the company during the year ended 31st December 2019?

Expert Solution

Required B

As at Dec 31, 2019

The investment held for the purpose of sale shall be revalued at RO 50,000 and the loss of RO 10,000 shall be recognized in the Statement of Other Comprehensive Income
The investment hold forever shall be recorded at its cost of RO 20,000.

Therefore, the amounts that will appear in the Financial Statements of the company as at Dec 31, 2019 = RO 50,000 + RO 20,000 = RO70,000

Required C

An investment classified as held for sale shall be revalued at its fair value of $600,000 and the loss of RO 100,000 shall be recognized in the Statement of Other Comprehensive Income.

Required D

Cost of Purchase of the 100,000 shares of the XYZ ltd = $420,000 +$10,000 = $430,000

Fair Value as at Dec 31, 2019 = 5.10* 100,000 = $510,000

Thus the investment in shares shall be revalued at $510,000 and the gain of 80,000 shall be recognized in the statement of Inome.

For any clarification, please comment. Kindly Up Vote

ekkarill92 answered 2 years ago

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