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
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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