On September 30, 20x6, Riches Inc. made three investments: 1369 shares of Wendle

Question

On September 30, 20x6, Riches Inc. made three investments: 1369 shares of Wendle Inc., 4140 shares of Sam International, and 807 shares of Hinter Inc. The shares of Wendle Inc. and Hinter Inc. are classified as FVTPL and the shares of Sam International are 1.00 classified as FVTOCI ton The market price per share is as follows: Sam International S5.25 $8.47 Wendle Inc. Hinter Inc. Sept. 30, x6 Dec. 31, x6 $13.00 $16.39 $7.36 $4.82 What amount would be reported as total comprehensive income for the year 20x6, assuming income before gains/losses on investments is $164972? Select one: O a. $167563 O b.$180894 C.$15922 O d. $13331

Explanation / Answer

Soution :

FVTPL : Investments recognised at " Fair value through Profit and loss A/c"

FVTOCI : Investments recognised at " Fair value through other comprehensive Income"

Assumptions : The investments held are Available for sale securities and the gain or loss on the investment is net of tax adjustments if any.

Correct answer is b : $180,894

Total Comprehensive income = Income before gains/loss from investments + gain/loss of investments recognised though profit and Loss + Other comprehensive income (OCI)

In this case , the unrealised gain of Sam Internation securities is to be categorised under OCI while the gains and losses of Wendle Inc. and Hinter Inc are added to the current income from operations.

Please refer below table :

Wendle Inc. Sam Hinter Date Internation Inc. Inc. FVTPL FVTOCI FVTPL 1 30-Sep                                        13                                      5                                               7 2 31-Dec                                        16                                      8                                               5 3 Quantity                                  1,369                              4,140                                          807 4 Purchase price                               17,797                           21,735                                      5,940 5 Market price                               22,438                           35,066                                      3,890 6 Gain/(Loss)                            4,640.91 13,330.80                              (2,049.78) I Income before gains/loss from investments                                  164,972 II Gain/loss for securities regonised at fair value through PL                                      2,591 III Other Comprehensive Income                                    13,331 IV Total Comprehensive Income ( I + II + III )                                  180,894

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