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Chapter 13: 11IFRS (page 658)

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

Expert verified

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

01

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)

02

Entry for dividend revenue

Date

Particulars

Debit

Credit



Cash

$1,300


Dividend Revenue

$1,300

(Being entry for the dividend revenue)

03

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.

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