Chapter 13: 7IFRS (page 658)
Indicate how unrealised holding gains and losses should be reported for investments classified as trading and held-for-collection.
Unrealised holding gains or loss is not included in held-for-collection securities.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
(Fair Value Measurement) Presented below is information related to the purchases of common stock by Lilly
Company during 2017.
Cost Fair Value
(at purchase date) (at December 31)
Investment in Arroyo Company stock \(100,000 \) 80,000
Investment in Lee Corporation stock 250,000 300,000
Investment in Woods Inc. stock 180,000 190,000
Total \(530,000 \)570,000
Instructions
(Assume a zero balance for any Fair Value Adjustment account.)
(a) What entry would Lilly make at December 31, 2017, to record the investment in Arroyo Company stock if it chooses to
report this security using the fair value option?
(b) What entry(ies) would Lilly make at December 31, 2017, to record the investments in the Lee and Woods corporations,
assuming that Lilly did not select the fair value option for these investments?
How does the acid-test ratio differ from the current ratio? How are they similar?
Faith Battle operates a health food store, and she has been the only employee. Her business is growing, and she is considering hiring some additional staff to help her in the store. Explain to her the various payroll deductions that she will have to account for, including their potential impact on her financial statements, if she hires additional staff.
BE13-2 (L01) Upland Company borrowed \(40,000 on November 1, 2017, by signing a \)40,000, 9%, 3-month note. Prepare Upland’s November 1, 2017, entry; the December 31, 2017, annual adjusting entry; and the February 1, 2018, entry.
(Debt Investments) Presented below is information from a bond investment amortization schedule with
related fair values provided. These bonds are classified as available-for-sale.
12/31/17 12/31/18 12/31/19
Amortized cost \(491,150 \)519,442 \(550,000
Fair value 497,000 509,000 550,000
Instructions
(a) Indicate whether the bonds were purchased at a discount or a premium.
(b) Prepare the adjusting entry to record the bonds at fair value on December 31, 2017. The Fair Value Adjustment account
has a debit balance of \)1,000 before adjustment.
(c) Prepare the adjusting entry to record the bonds at fair value on December 31, 2018.
What do you think about this solution?
We value your feedback to improve our textbook solutions.
