During 20X0, Cosmo purchased shares in two corporations and bond securities of a third. The share investments are classified as FVOCI-Equity and the bond investment is FVTPL. Transactions in 20X0 include:
a. Purchased 3,000 of the 100,000 common shares outstanding of ABC Ltd. at $31/share plus a 4$ brokerage fee.
b. Purchased 10,000 of 40,000 outstanding preferred shares (non voting) of DEF Ltd at $78/share plus a 3% brokerage fee.
c. Purchased an additional 2,000 common shares of ABC Ltd at $35/share plus a 4% brokerage fee.
d. Purchased $400,000 par value of Entity Ltd., 9% bonds at 100(par) plus accrued interest. The purchase is made on November 1; interest is paid semi annually on January 31 and July 31. The bond matures on July 31, 20X5.
e. Received $4/share cash dividend on the DEF Ltd. shares
f. Interest is accrued at the end of 20X0
g. Fair values at December 31, 20X0: ABC Ltd shares, $34;/share; DEF Ltd, $82/share; Entity Ltd bonds 98
- Give the entries in the accounts of Cosmo for each transaction
- Give the items and amounts that would be reported in 20X0 earnings and all amounts on the statement of financial position.
- Repeat 1 and 2 assuming that all the investments are FVTPL investments. Note that for FVTPL investments, all acquisition fees are expensed immediately. Also, some of the entries will be the same as under Q1