Grouper Corp. has the following portfolio of securities acquired for trading purposes and accounted for using...

Grouper Corp. has the following portfolio of securities acquired for trading purposes and accounted for using the FV-NI model at September 30, 2017, the end of the company’s third quarter:

Investment Cost Fair Value 48,000 common shares of Yuen Inc. $273,600 $192,000 3,300 preferred shares of Monty Ltd. 125,400 132,000 1,400 common shares of Oakwood Inc. 126,000 125,300

On October 8, 2017, the Yuen shares were sold for $5.70 per share. On November 16, 2017, 3,000 common shares of Patriot Corp. were purchased at $43.90 per share. Grouper pays a 1% commission on purchases and sales of all securities. At the end of the fourth quarter, on December 31, 2017, the fair values of the shares held were as follows: Monty $102,200; Patriot $117,000; and Oakwood $142,100. Grouper prepares financial statements every quarter. Assume Grouper follows IFRS 9 and does not recognize dividends and other investment income accounts separately. Required:

a) Prepare the journal entries to record the sale, purchase, and adjusting entries related to the portfolio for the fourth quarter of 2017.

b) Indicate how and where the investments would be reported on the December 31, 2017 statement of financial position.

Expert Solution

a) Journal entries;

Date	Accounts Titles	Debit $	Credit $
Oct 8 2017	Cash	270864		480005.799%
	Loss on sale of investment	2736
	Available for sale securities		273600
	(being sale of securities recorded and loss booked)

Nov 16 2017	Available for sale securities	133017		300043.90101%
	Cash		133017
	(being purchase of securities of CS of Patriot Corp.)

Dec 31 2017	Unrealised Loss on Fair Value	23117
	Available for sale securities		23117
	(being fair value loss booked on securities)
		Cost	Fair value	Gain/Loss
	Monty	125400	102200	-23200
	Oakwood	126000	142100	16100
	Patriot	133017	117000	-16017
	Unrealised Loss		361300	-23117


b) Presentation of Accounts:

	Assets (abstract)
	Cash	137847	(270864-133017)
	Available for sale securities	361300
	Unrealised Loss on fair valuation	23117

	Liabilities (abstract)
	Loss on sale of securities	2736

ekkarill92 answered 1 year ago

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