Reference no: EM132575790

The Magnus Corporation, a publicly accountable entity, had the following investments as at December 31, 20x2:

Company            Type             Classification           Original Cost            Carrying Value            Fair Value

Will Corp.            Shares            FVPL                     $65,000                   $61,000                 $58,000

Simon Co.           Shares          FVPL                        205,000                  212,000                   225,000

Craig Inc.          Shares          FVOCI                        82,000                      88,000               106,000

Frey Inc.         Shares          FVOCI                         94,000                       80,000                   88,000

Blandin Co.        Bonds         FVOCI                          210,106                        210,106                   210,106

The Blandin Co. bonds were purchased on December 31, 20x2. The bonds have a face value of $200,000, pay interest of 4% semiannually (Jun 30 & Dec 31) and mature on December 31, 20x19. Bond issue costs were capitalized to the FVOCI investment account.

The following transactions took place in 20x3:

Feb 4 Sold the Simon shares for $250,000 less $10,000 in brokerage fees

Mar 31 Purchased shares of Winny Inc. for $105,000 plus $6,500 in brokerage fees. The shares are classified as FVPL.

April 20 Sold the Frey Inc. shares for $98,000 less $1,800 in brokerage fees.

Aug 12 Purchased shares of Bane Co. for $45,000 plus $1,000 in brokerage fees. The shares are classified FVOCI.

Dec 31 The fair values of the investments on hand are as follows:

Will Corp. $ 51,000

Craig Inc. 125,000

Blandin Co. 206,000

Winny Inc. 114,000

Bane Co. 29,500

Required -

Question a) Prepare the journal entries to record all 20x3 transactions for the investments above. When preparing the December 31, 20x3 fair value adjustment entry, write two journal entries only: one for the total fair value adjustment on FVPL investments and one for the total fair value adjustment on FVOCI investments. Do not show a separate journal entry for each individual investment.

Question b) Assume that Magnus's net income for the year ended December 31, 20x3 is $1,000,000. Prepare the bottom portion of the Statement of Comprehensive Income starting with the net income line.

Question c) show a t-account showing the transaction in the AOCI account from the beginning to the end of the year. Prove the ending balance.

Question d) At the end of 20x4 the Blandin Co. bonds were trading at 104. show all journal entries for the bonds for the year ended December 31, 20x4.