Recall 3 year-old Manny, at the beginning of the chapter, who has & a seizure disorder. He receives his care in a mobile van sent to his community by the….
What type of accounting treatment is this investment?
On January 1, Maverick Co. purchased 500 common shares of Western Ltd. for $50,000 plus a 1% commission of the transaction. On September 30, Western declared and paid a cash dividend of $2.25 per share. At year-end, the fair value of the shares was $108 per share. In early March of the following year, Maverick sold the shares for $57,000 less a 1% commission. The shares are not publically traded so Maverick will account for them using the cost method. Maverick follows ASPE.
a. What type of accounting treatment is this investment?
b. Prepare the journal entry for the purchase, the dividends received, and the sale. Are any year-end adjustments required?
c. Assume now that Maverick follows IFRS and the investment in shares is accounted for as a non-strategic, held-for-trading (HFT) investment. Prepare the journal entry for the purchase, the dividends received, any year-end adjusting entries and the sale.
d. How would your answer to part (c) change if Maverick follows ASPE and the shares are traded on an active market?