Chapter 9
Investments
450
AP-13A
(
1
3
)
The following are investment activities for Koko Company. Assume the company follows IFRS.
1) On January 31, 2016, Koko Company purchased a $20,000, 10-year bond at par with 5%
interest paid annually on December 31. Koko Company is planning to hold this investment
until maturity.
2) On February 10, 2016, Koko Company invested $15,000 in Bast Company by purchasing
3,000 common shares. Koko Company is planning to sell these shares to make a profit
before the end of the year.
3) On March 1, 2016, Koko Company made a strategic business investment of $62,500 with
Engrid Company by acquiring 5% of its 100,000 outstanding common shares.
4) On April 1, 2016, Koko Company received a cash dividend from Bast Company for a total of
$900.
5) On April 30, 2016, Koko Company received a cash dividend from Engrid Company for a
total of $1,250.
6) On Koko Company’s year-end of October 31, 2016, Bast Company’s common shares were
trading at $6.00 per share, and Engrid Company’s shares were trading at $12.15 per share.
Required
a) Prepare journal entries using proper accounting methods for all transactions including the
year-end accrual of bonds’ interest.
