Chapter 9
Investments
437
Application Questions Group A
AP-1A (
1
)
Affy Company makes some investments in 2016. Affy Company has adopted IFRS standards
since 2011. Complete the following table for each of the investments.
Investments
Non-Strategic
or Strategic
Investment
Classification on
Affy Company’s
Balance Sheet
Accounting
Treatment
A 90-day treasury bill purchased on November 15,
2016 that Affy plans to hold for interest revenue until
maturity.
A two-year provincial bond purchased on April 1, 2016
that Affy is planning to sell before the year-end of
December 31, 2016.
A five-year bond issued by a private business on
November 1, 2016 that Affy is planning to hold until
maturity.
10% of common shares of Smith Company purchased
on November 2, 2016 with significant influence over
the investee.
6% of common shares of John Company purchased on
December 2, 2016, which Affy is planning to hold for a
short period of time before selling to make a profit.
45% of common shares of Steve Company, with which
Affy has just signed a long-term business alliance
agreement.
AP-2A (
1
2
)
Kaman Company is a public company. It decided to purchase a $200,000, 90-day treasury bill
(T-bill) on March 1, 2016 for $198,000. The investment will mature on May 29, 2016. Kaman
plans to hold this investment until maturity. The market rate for this type of T-bill is set at 4%
annually. The company’s year-end is March 31.
Round your answers to the nearest whole dollar.
Required
a) What kind of accounting methods should be considered to record this investment?
