Koala Had the Following Transactions Relating to Its Investments During

question 112

Essay

Koala had the following transactions relating to its investments during 2017.Koala uses the effective interest method of amortization of premiums or discounts when applicable.
a.On July 1,2017,Koala acquired a $400,000,16%,8-year government bond with interest paid semi-annually on January 1 and July 1.Because the market rate of interest was 12% on that date,Koala paid $480,847 for the bond.The bonds were classified as at amortized cost by Koala and had a fair value of $440,000 plus accrued interest on December 31,2017.
b.On July 1,2017,Koala acquired 10,000 shares of Gorilla at a price of $41 per share.On December 31,2017,the ex-dividend date,dividends of $2.00 per share were declared with an expected date of payment of January 15,2018.On December 31,2017,the fair value of the Gorilla shares had increased to $42 per share.Management irrevocably elect to classify the investment at fair value through OCI.
c.On July 1,2017,Koala acquired 45,000 shares (20%)of the outstanding shares of Black Bear at a price of $15 per share,giving it significant influence over Black Bear.Black Bear had net income of $600,000 for the six months ended December 31,2017 and declared and paid total dividends of $10,000 to its shareholders on December 31,2017.On December 31,2017,Black Bear's shares had a fair value of $19 per share.
Required:
Provide all journal entries required relating to these investments on July 1,2017 and December 31,2017,including any journal entries required relating to the change in fair value for the year.

Recognize the importance of environmental factors and community infrastructure in disease prevention.

Understand the historical development of public health initiatives and their impact on community health.

Analyze the role of government and non-governmental organizations in the advancement of public health.

Identify key figures and their contributions to public health and nursing.

---

Definitions:

Premium Pricing

A strategy where goods or services are priced higher than the market average to create a perceived value of higher quality or exclusivity.

Odd Pricing

A pricing strategy that involves setting prices just below round numbers (e.g., $9.99 instead of $10) to make products appear cheaper to consumers.

Gray Market Activity

The trade of a commodity through distribution channels that, while legal, are unofficial, unauthorized, or unintended by the original manufacturer.

Luxury Watches

High-end, often expensive timepieces that are considered a symbol of status and craftsmanship, combining precision in timekeeping with elaborate design and materials.