Porter Inc. is a Canadian public company with a December 31 year end. On January 1, 2007, the company acquires 5,000 shares of Santin Ltd. at a cost of $23 per share. Transaction costs total $1,150. The investment does not give Porter influence over, or control of, Santin. Porter classifies these shares as held for trading. During the year ending December 31, 2007, Santin Ltd. declares and pays dividends of $0.90 per share. On December 31, 2007, the fair value of the Santin shares has declined to $19 per share. On March 1, 2008, Porter sells all of the Santin shares for $25 per share. Transaction costs for the disposal are $1,250. Provide the journal entries to record the preceding information on the books of Porter Inc. and a summary of the effect of the investment in Santin on Porter's Net Income.

Porter Inc. is a Canadian public company with a December 31 year end. On January 1, 2007, the company acquires 5,000 shares of Santin Ltd. at a cost of $23 per share. Transaction costs total $1,150. The investment does not give Porter influence over, or control of, Santin. Porter classifies these shares as held for trading. During the year ending December 31, 2007, Santin Ltd. declares and pays dividends of $0.90 per share. On December 31, 2007, the fair value of the Santin shares has declined to $19 per share. On March 1, 2008, Porter sells all of the Santin shares for $25 per share. Transaction costs for the disposal are $1,250. Provide the journal entries to record the preceding information on the books of Porter Inc. and a summary of the effect of the investment in Santin on Porter's Net Income.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 28E

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