Question

On January 20X5, Gemberg Company has the following investments Net Carrying Value at 1 January 20X5 FVNI investments Diamond (2,000 common shares) $19,000 Ruby (10,000 common shares) 50,000 Sapphire (5,000 common shares) 40,000 To date, the company has recognized in earnings a $5,000 holding loss with respect to the Diamond shares, a $5,000 holding gain with respect to the Ruby shares, and a $2,000 holding gain with respect to the Sapphire shares. The following transactions occur during 20X5 a. On 1 February 20X5, Gemberg purchases $30,000 of face amount bonds issued by Emerald Inc. For $29,500 plus accrued interest. The bonds have a coupon rate of 8%, pay interest semi-annually on 30 June and 31 December, and mature on 31 December 20X9. The investment is classified as an AC (At Cost) investment. b. Dividends of $0.75 per share are received on the Diamond common shares on 30 May. c. Interest on the Emerald bonds is received on 30 June and 31 December. Total amortization of the discount has been calculated to be $109 in 20X5. d. On 1 July, the Ruby shares are sold for $58,000. The proceeds are used to buy 1,000 Opal Company shares for $40 per share. These shares are classified as FVOCI-Equity. e. On 1 October, Gemberg purchased $45,000 of face amount bonds issued by Jade Corp. for $52,130. The bonds have a coupon of 11%, pay interest semi-annually on April and October 1, and mature on 1 October 20X12. The effective interest rate for these bonds is 8%. This investment is classified as FVOCI-Bonds. f. On 30 November, Diamond shares are sold for $21,000. g. At 31 December, the fair values of the various investments are determined to be as follows 1. Sapphire common $57,500 2. Opal common 33,000 3. Emerald bonds (excluding accrued interest) 31,000 4. Jade bonds (excluding accrued Interest) 49,000 h. The Sapphire and Opal shares are short-term investments at year-end, while the Emerald and Jade bonds are long term. Required 1. Prepare the amortization schedule for the Jade bonds for the first three interest payments. 2. What amount of investment revenue or loss, from all sources, is reported in earnings for 20X5? 3. Show changes in other comprehensive income. 4. Show the accounts and amounts related to the investments that are reported as assets at the end of 20x5.

Answer 1