Problem
New Orleans Ltd Long term available for sale portfolio at 31 December 2017 consists of the following;
|
Available for sale securities
|
Cost $
|
Fair Value $
|
|
27,500 shares for R Co LTD
|
559,125
|
599,063
|
|
8,500 shares of S Co LTD
|
308,380
|
293,250
|
|
11,000 shares of T Co LTD
|
147,295
|
151,800
|
New Orleans enters into the following long-term investment transactions in the year 2018.
Jan 13 Sold 2,15 shares of S. Co ltd for $ 72,250 less brokerage fee of $ 1,195.
Mar24 Purchased 15,500 shares of U Co. Ltd ordinary shares for $282,875 plus brokerage commission of $ 1,980. The shares represent a 62% ownership of U company Ltd.
Apr 5. Purchased 42,500 shares of Co. V common stock for $133,875 plus brokerage fees of $ 1,,125. The shares represent a 10% ownership in V company.
Sept. 2 Sold 11,000 shares of T Co. Ltd for $ 156,750 less a brokerage fee of $ 2,700.
Sept 27 Purchased 2,500 shares of W Co. Ltd common stock for $50,500 plus brokerage fees of $ 1,050. The shares represent a 25% ownership interest in W Company Ltd
Oct. 30 Purchased 5,000 shares of X Co. Ltd common stock for $48,750 plus brokerage fees of $ 1,170. The shares represent a 13% ownership interest in W Company Ltd.
The fair values of its investments at 31 December 2018 are R, $ 568,125; S, $ 210,375; U, $ 272,800; V, 134,938; W, $ 54,689; and X $45,625.
Task
i. Determine the amount New Orleans should report on its 31 December 2018 statement of financial position for its long term investments in available for sale securities.
ii. Determine any necessary adjusting entry to record the fair value adjustment for the longterm investment in the available for sale securities as at 31 December 2018.
iii. What amount of gains or losses on transactions relating to long-term investments in available for sale securities should New Orleans report in its profit and loss statement for 2015?