Question

Walker Inc. began operations on January 1, 20X5. The company reports its financial statements in accordance...

Walker Inc. began operations on January 1, 20X5. The company reports its financial statements in accordance with IFRS. On December 31, 20X5, the company owned the following investments:

Type

Category

Cost

Fair value at year end

Other

5% bonds

Amortized cost

$250,000

$249,000

Purchased at par on January 1, 20X5. Face value is $250,000.

Shares

fair value through profit or loss (FVPL)

85,000

93,000

$15,000 dividends declared in 20X5; $11,000 was received in the 20X5 fiscal year and the remaining $4,000 was received in the 20X6 fiscal year.

Shares

fair value through other comprehensive income(FVOCI)

45,000

32,000


What is the total income from investments that Walker reported in the calculation of net income before taxes in the statement of comprehensive income for the year ended December 31, 20X5?
a- 21,500
b- 22,500
c- 31,500
d- 35,500

Homework Answers

Answer #1

Answer)

5% Bonds - Since amortization cost method is followed in valuation of Bond, it is to be valued at 250,000. No, profit or loss on such bonds.

Interest income = 5% of 250,000

= $12500

Total Income in P&L from 5% Bonds = $12,,500

Shares (FVPL) -

Dividend Income = $ 15,000

unrealised gain = 93,000 - 85000

= $ 8,000

Total income from shares (FVPL) = 15,000 + 8,000

= 23,000

Shares (FVOCI)-

Gain or loss on FVOCI is tranfered to reserves through OCI account. so this not affect Profit and loss? Income staemnet in any condition.

Income from investments = $ 12,500 + 23,000

= $ 35,500

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