Question
In: Accounting
Pronghorn Inc. shows on its statement of financial position its investments accounted for as FV-OCI investments....
Pronghorn Inc. shows on its statement of financial position its
investments accounted for as FV-OCI investments. At its year end of
May 31, 2018, the balance in the FV-OCI Investments account was
$93,500 and at its year end of May 31, 2019, the balance was
$123,500. Pronghorn’s statement of comprehensive income for the
year ended May 31, 2019, shows an unrealized loss from fair value
adjustment on FV-OCI investments of $23,300. There were no sales of
FV-OCI investments during the year, only purchases.
Determine the necessary caption and amount that should appear on
Pronghorn’s statement of cash flows prepared using the indirect
method and determine if the entry appear under the operating,
investing, or financing section of the statement.
Solutions
Expert Solution
Unrealized loss from Fair value adjustment on FV- OCI Investment in a non - cash item which will reduce the value the value of Investment balance ,
therefore after adjustment
FO-OCI Investment balance= $ 93,500- $ 23,300
FO-OCI Investment balance = $ 70,200
The purchase of Investment in cash = Balance on May 31,2019 - FO-OCI Investment Balance after adjustment
= $ 123,500- 70,200= $ 53,300
Due to purchase Investment in cash ,cash will used( reduce) by purchase amount therefore
Statement of cash flow (partial)
|
Investing activities |
$ |
|
Purchases of fair value through other comprehensive income Investment |
- 53,300 |
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ekkarill92 answered 1 year agoRelated Solutions
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