Flint Ltd. is a Canadian publicly-traded business with a December 31 fiscal year

Question

Flint Ltd. is a Canadian publicly-traded business with a December 31 fiscal year end. In order to get a better return on some of its excess cash, Flint purchased 190 common shares of AFS Corporation on July 1, 2017 at a price of $5.87 per share. On the day of acquisition, Flint elected to account for the investment using the fair-value through other comprehensive income (FV-OCI) without recycling model. On August 1, 2017, AFS declared dividends of $0.60/share, and paid those dividends on August 20, 2017. On December 31, 2017, shares in AFS were trading at $6.80 per share. On September 15, 2018, Flint sold the shares in AFS for $7.80 per share.

Prepare the journal entries required to record the above transactions on the books of Flint Ltd.

Date Account Titles and Explanation Debit Credit To adjust to current fair value.) (To record the sale of shares.)

Explanation / Answer

Solution:

Journal Entries - Flint Ltd Date Account titles and Explantation Debit Credit 1-Jul-17 Equity Investment - AFS Dr $1,115.30         To Cash $1,115.30 (To record purchase of share of AFS corportation) 1-Aug-17 Dividend receivables Dr $114.00         To Dividend revenue $114.00 (To record dividend declared by AFS) 20-Aug-17 Cash Dr $114.00         To Dividend receivables $114.00 (To record receipt of dividend) 31-Dec-17 Fair value adjustment Dr [($6.80 - $5.87)*190] $176.70         To Unrealized holding gain or loss - OCI $176.70 (To record fair value adjustment on AFS investment) 15-Sep-18 Cash Dr $1,482.00 Unrealized holding gain or loss - OCI Dr $176.70         To Fair value adjustment $176.70         To Equity Investment - AFS $1,115.30         To Gain on sale of investment $366.70 (To record sale of investment)

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.