On January 1,20X2,Soho Co.purchased 4,000 shares,representing 12%,of Rico Inc.for $78,000.Soho is a publicly traded company.During the next two years,the following information was available for Rico.

Required:
a.Assuming Soho classifies this investment as FVTPL,prepare the journal entries for the next two years related to this investment,and the carrying value of the investment at the end of 20X2 and 20X3.
b.Assuming Soho classifies this investment as FVTOCI,prepare the journal entries for the next two years related to this investment,and the carrying value of the investment at the end of 20X2 and 20X3.

Question

On January 1,20X2,Soho Co.purchased 4,000 shares,representing 12%,of Rico Inc.for $78,000.Soho is a publicly traded company.During the next two years,the following information was available for Rico.
  
Required:
a.Assuming Soho classifies this investment as FVTPL,prepare the journal entries for the next two years related to this investment,and the carrying value of the investment at the end of 20X2 and 20X3.
b.Assuming Soho classifies this investment as FVTOCI,prepare the journal entries for the next two years related to this investment,and the carrying value of the investment at the end of 20X2 and 20X3.

Quizplus · Accepted Answer

The Answer of On January 1,20X2,Soho Co.purchased 4,000 shares,representing 12%,of Rico Inc.for $78,000.Soho is a publicly traded company.During the next two years,the following information was available for Rico.
  
Required:
a.Assuming Soho classifies this investment as FVTPL,prepare the journal entries for the next two years related to this investment,and the carrying value of the investment at the end of 20X2 and 20X3.
b.Assuming Soho classifies this investment as FVTOCI,prepare the journal entries for the next two years related to this investment,and the carrying value of the investment at the end of 20X2 and 20X3.