Example 1) Fair value through profit or loss: Equity investment ABC Co. had the following transactions pertaining its trading investments: Jul. 1, 2021 Purchased 1 million common shares of XYZ Inc. at $10 per share. Dec. 31, 2021 Common shares if XYZ traded at $12 per share. Jan. 15, 2022 XYZ paid a cash dividend of $1 per share. Mar. 1, 2022 Sold 1 million common shares of XYZ at $11 per share. Instruction: Record the above transactions, using the fair value through profit or loss model. Also, prepare any required adjusting entry/entries at December 31, 2021. ABC Co. has a December 31 year-end.
Example 1) Fair value through profit or loss: Equity investment ABC Co. had the following transactions pertaining its trading investments: Jul. 1, 2021 Purchased 1 million common shares of XYZ Inc. at $10 per share. Dec. 31, 2021 Common shares if XYZ traded at $12 per share. Jan. 15, 2022 XYZ paid a cash dividend of $1 per share. Mar. 1, 2022 Sold 1 million common shares of XYZ at $11 per share. Instruction: Record the above transactions, using the fair value through profit or loss model. Also, prepare any required adjusting entry/entries at December 31, 2021. ABC Co. has a December 31 year-end.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please help me to solve this problem
Transcribed Image Text:Example 1)
Fair value through profit or loss: Equity investment
ABC Co. had the following transactions pertaining its trading investments:
Jul. 1, 2021
Purchased 1 million common shares of XYZ Inc. at $10 per
share.
Dec. 31, 2021
Common shares if XYZ traded at $12 per share.
Jan. 15, 2022
XYZ paid a cash dividend of $1
per
share.
Mar. 1, 2022
Sold 1 million common shares of XYZ at $11 per share.
Instruction:
Record the above transactions, using the fair value through profit or loss model. Also, prepare any
required adjusting entry/entries at December 31, 2021. ABC Co. has a December 31 year-end.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education