Question 2 Arantxa Corporation made the following purchases of investments durin

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Question 2 Arantxa Corporation made the following purchases of investments during 2014, the first year in which Arantxa invested in equity securities: 1. On January 15, purchased 8,370 shares of Nirmala Corp.’s common shares at $31.16 per share plus commission of $1,841. 2. On April 1, purchased 4,650 shares of Oxana Corp.’s common shares at $48 per share plus commission of $3,134. 3. On September 10, purchased 6,510 shares of WTA Corp.’s preferred shares at $24.65 per share plus commission of $2,706. On May 20, 2014, Arantxa sold 2,790 of the Nirmala common shares at a market price of $33 per share less brokerage commissions of $2,651. The year-end fair values per share were as follows: Nirmala $28; Oxana $51; and WTA $26. The chief accountant of Arantxa tells you that Arantxa Corporation holds these investments with the intention of selling them in order to earn short-term profits from appreciation in their prices and accounts for them using the fair value though net income model, with no separate reporting of dividends and other types of FV-NI investment income and losses. Assume that Arantxa Corporation follows IFRS, and specifically IAS 39. Collapse question part (a) Prepare the journal entries to record the three investments. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)

Explanation / Answer

Journal Entries

Jan.15

Investment in stock of Nirmala corp. Dr. 262,650

Commission Dr. 1,841

      To Bank                                                                 262,650

( 8,370 X 31.16 shares in equity and commission 1,841)

Apr. 1

Investment in stock of Oxana corp Dr. 223,200

Commission Dr. 3,134

                        To Bank                                             226,334

( 4,650 shares X 48 per plus commission of $3134 )

Sep. 10

Investment in stock of WTA corp. Dr. 160,472

Commission                                         Dr. 2,706

                       To Bank                                             163,178

( 6,510 Shares X34.65 per share plus commission of $2,706 )

May,20, 2014

                          Bank           Dr. 89,419

                      Commission Dr.   2,651

                             To Stock of Nirmala Co.      92,070

( Sold shares of Nirmala co. with less commission 2,651 )

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