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On 12/1/16, ABC Grocers, Inc. purchased 1,000 shares at $110/share (a 10% interest) of the stock...

On 12/1/16, ABC Grocers, Inc. purchased 1,000 shares at $110/share (a 10% interest) of the stock of the publicly traded company, Sampson Company for $110,000. The Company paid $1,400 commission to complete the purchase. ABC decided to classify the investment as a trading security for U.S. GAAP, and similarly as FVTPL (Fair Value through Profit & Loss) for IFRS because it intends on selling the asset soon to capitalize on short-term gains from stock appreciation. Brokerage costs are expensed under IFRS. In mid-December, management of ABC decided not to sell the investment in Sampson but to hold it for the foreseeable future. The stock is selling for $115/ share . At year-end, 12/31/16, the stock is selling for $112/share. Required: Record the journal entry for the purchase of the investment on December 1st and reclassification mid-December, and record necessary adjusting journal entries in their own adjusting journal entry workpaper and also in the respective trial balance worksheet for 12/31/16.

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Answer #1
No:of Shares 1000
Rate per share 110
Amount paid $ 110,000.00
Commission paid 1400
12-01-16
Shares Dr $ 110,000.00
Commission Dr $      1,400.00
Bank Cr $ 111,400.00
Middle of December
Shares(reclassified) Dr $ 115,000.00
(1000*115$)
Profit and loss Cr $      5,000.00
Shares Cr $ 110,000.00
31-12-16
No entry to be made
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