Pronghorn Corporation a Canadian-based international company that follows IFRS, has the following securities in its portfolio of investments acquired for trading purposes and accounted for using the FV-NI method on December 31, 2019: Investments Carrying Amount (before adjustment) Fair Value 1,300 shares of David Jones Inc., common $72,500 $67,900 4,900 shares of Hearn Corp., common 166,600 161,800 450 shares of Alessandro Inc., preferred 76,500 79,000 $315,600 $308,700 In 2020, Pronghorn completed the following securities transactions: Mar. 1 Sold the 1,300 shares of David Jones Inc. common at $48 per share, less fees of $600. Apr. 1 Bought 900 shares of Oberto Ltd. common at $71 per share, plus fees of $1,100. Pronghorn Corporation’s portfolio of trading securities appeared as follows on December 31, 2020: Investments Original Cost Fair Value 4,900 shares of Hearn Corp., common $166,600 $161,800 900 shares of Oberto Ltd., common 63,900 61,600 450 shares of Alessandro Inc., preferred

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Pronghorn Corporation a Canadian-based international company that follows IFRS, has the following securities in its portfolio of investments acquired for trading purposes and accounted for using the FV-NI method on December 31, 2019: Investments Carrying Amount (before adjustment) Fair Value 1,300 shares of David Jones Inc

Accounting Oct 26, 2020

Pronghorn Corporation a Canadian-based international company that follows IFRS, has the following securities in its portfolio of investments acquired for trading purposes and accounted for using the FV-NI method on December 31, 2019:

Investments	Carrying Amount (before adjustment)		Fair Value
1,300 shares of David Jones Inc., common		$72,500	$67,900
4,900 shares of Hearn Corp., common		166,600	161,800
450 shares of Alessandro Inc., preferred		76,500	79,000
		$315,600	$308,700

In 2020, Pronghorn completed the following securities transactions:

Mar. 1		Sold the 1,300 shares of David Jones Inc. common at $48 per share, less fees of $600.
Apr. 1		Bought 900 shares of Oberto Ltd. common at $71 per share, plus fees of $1,100.

Pronghorn Corporation’s portfolio of trading securities appeared as follows on December 31, 2020:

Investments	Original Cost	Fair Value
4,900 shares of Hearn Corp., common	$166,600	$161,800
900 shares of Oberto Ltd., common	63,900	61,600
450 shares of Alessandro Inc., preferred	76,500	74,600
	$307,000	$298,000

Assume that the company does not recognize and report dividends and other components of investment gains and losses separately.


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Prepare the Pronghorn Corporation general journal entry to record the adjusting entry for December 31, 2019. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

SHOW LIST OF ACCOUNTS
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Prepare the Pronghorn Corporation general journal entry to record the sale of the David Jones Inc. shares. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

Prepare the Pronghorn Corporation general journal entry to record the purchase of the Oberto Ltd. shares. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Prepare the Pronghorn Corporation general journal entry to record the adjusting entry for December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Expert Solution

Account Titles and Explanation	Debit	Credit
Investment Income or Loss	6,900
FV-NI Investments		6,900
To record the adjusting entry

Account Titles and Explanation	Debit	Credit
Cash	61,800
Investment Income or Loss	6,100
FV-NI Investments		67,900
To record the sale of the David Jones Inc. shares

Account Titles and Explanation	Debit	Credit
FV-NI Investments	63,900
Investment Income or Loss	1,100
Cash		65,000
To record the purchase of the Oberto Ltd. shares

Account Titles and Explanation	Debit	Credit
Investment Income or Loss	6,700
FV-NI Investments		6,700
To record the adjusting entry

Calculation

To record the adjusting entry for December 31, 2019, we need to debit the Investment Income or Loss account as it the loss and credit the FV-NI Investments. For that we need to find the variance of the total Carrying Amount before adjustment and the total fair value.

So, FV-NI Investments loss = 315,600 - 308,700 = 6,900

To record the sale of the David Jones Inc. shares, we need to debit the cash received and also the Investment Income or Loss. And credit the FV-NI Investments account.

Cash received = 1300 x 48 - 600 = 61,800

FV-NI Investments = Fair value of the invesment which is 67,900

So the loss = 67,900 - 61,800 = 6,100

To record the purchase of the Oberto Ltd. shares, we need to credit the cash paid and then debit the loss and the FV-NI Investments account.

FV-NI Investments = 900 x 71 = 63900

loss = 1,100

Cash paid = 63900 + 1,100 = 65,000

To record the adjusting entry for December 31, 2020, we need to debit the Investment Income or Loss account as there is the loss and credit the FV-NI Investments. For that we need to find the variance of the total Carrying Amount before adjustment and the total fair value.

	Carrying Amount	Fair Value
Hearn Corp	161,800	161,800
Oberto Ltd	63,900	61,600
Alessandro Inc	79,000	74,600
Total portfolio	304,700	298,000

So, FV-NI Investments loss = 304,700 - 298,000 = 6,700

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