Question

Use the information from IFRS17-10 but assume the shares were purchased to meet a non-trading regulatory requirements. Prepare Fairbanks' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment.

Short answer

Non-trading investment debited by $13,200 and cash credited by $13,200. Cash debited by $1,300 and dividend revenue credied by $1,300.

Step-by-step solution

Entry for purchase of investment

Date	Particulars	Debit	Credit
	Non-Trading Investment	$13,200
	Cash		$13,200
	(Being entry for the purchase of trading investment)

Entry for dividend revenue

Date	Particulars	Debit	Credit
	Cash	$1,300
	Dividend Revenue		$1,300
	(Being entry for the dividend revenue)

Entry for fair value adjustment

In this, the investment is non-trading in nature which means the investment is held until maturity. Hence, no entry of the fair value adjustment is passed.