Question

Exercise 9-9

Bramble Corporation, a Canadian-based international company that follows IFRS, has the following securities in its portfolio of investments acquired for trading purposes and accounted for using the FV-NI method on December 31, 2019:

Investments		Carrying Amount (before adjustment)				Fair Value
1,600 shares of David Jones Inc., common			$89,000			$84,800
4,600 shares of Hearn Corp., common			170,200			164,200
370 shares of Alessandro Inc., preferred			51,800			53,900
			$311,000			$302,900

In 2020, Bramble completed the following securities transactions:

Mar. 1		Sold the 1,600 shares of David Jones Inc. common at $49 per share, less fees of $700.
Apr. 1		Bought 600 shares of Oberto Ltd. common at $79 per share, plus fees of $1,600.

Bramble Corporation’s portfolio of trading securities appeared as follows on December 31, 2020:

Investments		Original Cost			Fair Value
4,600 shares of Hearn Corp., common		$170,200			$164,200
600 shares of Oberto Ltd., common		47,400			45,500
370 shares of Alessandro Inc., preferred		51,800			49,500
		$269,400			$259,200

Assume that the company does not recognize and report dividends and other components of investment gains and losses separately.

A. Prepare the Bramble Corporation general journal entry to record the adjusting entry for December 31, 2019.

B. Prepare the Bramble Corporation general journal entry to record the sale of the David Jones Inc. shares.

C. Prepare the Bramble Corporation general journal entry to record the purchase of the Oberto Ltd. shares.

D. Prepare the Bramble Corporation general journal entry to record the adjusting entry for December 31, 2020.

Answer 1

Credit Transaction A Debit $ 8,100 Date Account Titles and Explanation December 31,2019 Unrealized Holding Gain or Loss - income Fair value adjustment (Trading) (being unrealised loss recorded) $ 8,100 B March.1,2020 $ 77,700 $ 11,300 Cash Loss on sale of investments Equity Investments (Trading) (Being equity investments sold recorded) $ 89,000 с April.1,2020 $ 47,400 Equity Investments (Trading) Cash (Being equity Investments purchased recorded) $ 47,400 D $ 2,100 December.31,2020 Unrealized Holding Gain or Loss - income Fair value adjustment (Trading) (Being unrealised loss recorded) $ 2,100

Cost Working notes: December 31,2019 Investments 1,600 shares of David Jones Inc., common 4,600 shares of Heam Corp., common 370 shares of Alessandro Inc., preferred Fair Value adjustment -Cr $ 89,000 $ 170,200 $ 51,800 Fair Value $ 84,800 $ 164,200 $ 53,900 Unrealized Gain(Loss S (4,200) $ (6,000) $ 2,100 S (8,100) March.1,2020 Equity investments = $89,000 Cash = 1,600*$49 -$700 = $77,700 Loss on sale of Investments =$89,000-$77,700 = $11,300 April.1,2020 Equity Investments (Trading) = 600*$79 = $47,400 December 31,2020 Investments 4,600 shares of Hearn Corp., common 600 shares of Oberto Ltd., common 370 shares of Alessandro Inc., preferred Total portfolio Previous fair value adjustment -Cr Fair Value adjustment -Dr Cost $ 170,200 $ 47,400 $ 51,800 $ 269,400 Fair Value $ 164,200 $ 45,500 $ 49,500 $ 259,200 Unrealized Gain(Loss $ (6,000) $ (1,900) $ (2,300) $ (10,200) S (8,100) S (2,100)