Investco is a trading firm and has Dec 31 as its annual closing date. On Oct 17th of 2019, it hadpurchased 1000 shares at $12 each. The share value on Dec. 31, 2019 was $10. Due to Covid andlockdown, the share value on Dec 31, 2020 was further down to $8. Markets recovered alittle in 2021 and the price as of Dec 31,2021 was $11. Markets further recovered and onJune 20, 2022 shey sold all shares for $13.Please provide the necessary journal entries to record the purchase, changes in investmentand sale of their investment, assuming this investment was categorized as FVTPL.

1. As per the data given in the question, it can be treated that the investment has been made in the…

Answered: Please provide the necessary journal…

Please provide the necessary journal entries to record the purchase, changes in investment and sale of their investment, assuming this investment was categorized as FVTPL.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Investco is a trading firm and has Dec 31 as its annual closing date. On Oct 17th of 2019, it had
purchased 1000 shares at $12 each. The share value on Dec. 31, 2019 was $10. Due to Covid and
lockdown, the share value on Dec 31, 2020 was further down to $8. Markets recovered a
little in 2021 and the price as of Dec 31,2021 was $11. Markets further recovered and on
June 20, 2022 shey sold all shares for $13.
Please provide the necessary journal entries to record the purchase, changes in investment
and sale of their investment, assuming this investment was categorized as FVTPL.

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Step 1 introduction

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Step 2 Calculation of Fair value gain or loss on each subsequent reporting period

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Step 3 Calculation of Gain on sale of Investments

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Step 4 Journal entries

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