Question

Pronghorn Corporation had the following portfolio of investments at December 31, 2020, that qualified and were accounted for using the FV-OCI method:

		Quantity		Percent Interest			Cost per Share			Fair Value per Share
Frank Inc.		2,000 shares		8%			$11			$17
Ellis Corp.		5,200 shares		14%			25			20
Mendota Ltd.		4,200 shares		2%			31			25

Early in 2021, Pronghorn sold all the Frank Inc. shares for $18 per share, less a 1% commission on the sale. On December 31, 2021, Pronghorn’s portfolio consists of the following common shares:

		Quantity		Percent Interest			Cost			Fair Value per Share
Ellis Corp.		5,200 shares		14%			$25			$29
Mendota Ltd.		4,200 shares		2%			31			24
Kaptein Inc.		2,500 shares		1%			24			21

Assume that Pronghorn reports net income of $160,400 for its year ended December 31, 2021, and that the company follows a policy of capitalizing transaction costs. Realized gains and losses on equity investments are reclassified from accumulated other comprehensive income directly to retained earnings.

What should be reported on Pronghorn’s December 31, 2020 statement of financial position for this long-term portfolio? (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Pronghorn Corporation Statement of Financial Position

		$

$

eTextbook and Media

List of Accounts

What should be reported on Pronghorn’s December 31, 2021 statement of financial position for these investments? (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Pronghorn Corporation Statement of Financial Position

		$

$

eTextbook and Media

List of Accounts

What should be reported on Pronghorn’s 2021 statement of comprehensive income for the investments accounted for using the FV-OCI model? Prepare a partial 2021 statement of comprehensive income for Pronghorn and provide an entry for classifying holding gains or losses to Retained Earnings on equity investments sold during 2021. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Pronghorn Corporation Statement of Comprehensive Income

		$

$

Account Titles and Explanation	Debit	Credit
(To reclassify realized gains - Frank Inc. shares)

Answer 1

Solution -

Working Note -