Learning Materials
Features
Discover
Chapter 13: Q2IFRS (page 658)
Briefly describe some of the similarities and differences between GAAP and IFRS with respect to the accounting for
investments.
Similarities are the classification of investments, fair value and amortised cost.
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
What is an onerous contract? Give two examples of an onerous contract.
Question: What evidence is necessary to demonstrate the ability to defer settlement of short-term debt?
Where can authoritative IFRS be found related to investments?
Fairbanks Corporation purchased 400 ordinary shares of Sherman Inc. as a trading investment for \(13,200. During the year, Sherman paid a cash dividend of \)3.25 per share. At year-end, Sherman shares were selling for $34.50 per share. Prepare Fairbanks’ journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment
(Debt and Equity Investments) Cardinal Paz Corp. carries an account in its general ledger called Investments,which contained debits for investment purchases, and no credits, with the following descriptions.
Feb. 1, 2017 Sharapova Company common stock, \(100 par, 200 shares \) 37,400
April 1 U.S. government bonds, 11%, due April 1, 2027, interest payable
April 1 and October 1, 110 bonds of \(1,000 par each 110,000
July 1 McGrath Company 12% bonds, par \)50,000, dated March 1, 2017,
purchased at 104 plus accrued interest, interest payable
annually on March 1, due March 1, 2037, 54,000
(Round all computations to the nearest dollar.)
(a) Prepare entries necessary to classify the amounts into proper accounts, assuming that the debt securities are classified
as available-for-sale.
(b) Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2017, using the
straight-line method.
(c) The fair values of the investments on December 31, 2017, were:
Sharapova Company common stock \( 31,800
U.S. government bonds 124,700
McGrath Company bonds 58,600
What entry or entries, if any, would you recommend be made?
(d) The U.S. government bonds were sold on July 1, 2018, for \)119,200 plus accrued interest. Give the proper entry.
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Exams 
GCSE 
IGCSE 
AS 
A Level 
International A Level 
University Admissions Tests 
Flashcards 
Vaia AI 
Notes 
Study Plans 
Study Sets 
Find a job 
Find a degree 
Student Deals 
Magazine 
Mobile App