Financial instrument. Company invests 15% $10,000 shares without holding for long term and looking for short term profit. At year end, market price increase.

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Presentation transcript:

Financial instrument

Company invests 15% $10,000 shares without holding for long term and looking for short term profit. At year end, market price increase to $12,000. Dr. Trading asset-2,000 Cr-Fair change of Trading asset 2,000

Company invests 15% $10,000 shares without holding for long term and looking for short term profit. At year end, market price decrease to $8,000. Cr. Trading asset-2,000 Dr-Fair change of Trading asset 2,000

Company invests 15% $10,000 shares with holding for long term and not looking for short term profit. At year end, market price increase to $12,000. Dr. Available for sales-2,000 Cr- Revaluation surplus2,000

Company invests 15% $10,000 shares with holding for long term and not looking for short term profit. At year end, market price decrease to $8,000. Cr. Available for sales-2,000 Dr- Revaluation surplus2,000

Company invests 35% $10,000 shares of Apple company without holding for long term and looking for short term profit. At year end, market price increase to $12,000. At year end, current year profit of APPLE Company is $5,000. Dr Investment in associate 10,000 Cr cash 10,000 Dr Investment in associate 5,000*35% Cr share of profit of associate 5,000*35%

Company invests 35% $10,000 shares of Apple company without holding for long term and looking for short term profit. At year end, market price increase to $8,000. At year end, current year profit of APPLE Company is $5,000 Dr Investment in associate 10,000 Cr cash 10,000 Dr Investment in associate 5,000*35% Cr share of profit of associate 5,000*35%

The company issue bond: Assume the $100,000, 8%, 10-year bonds is sold for $107,106, based on an effective interest rate of 7%.

Effective-Interest Method

Cr. Held to maturity –liability 107,106 Dr- Cash 107,106 Cr. Cash 4,000 Dr- Held to maturity –liability 4,000 Cr. Held to maturity –liability 3,749 Dr- Finance cost- I/S 3,749