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On January 1, 20X2, Soho Co Soho Sold All of Its 4,000 Shares in Rico on 12

question 7

Essay

On January 1, 20X2, Soho Co. purchased 4,000 shares, representing 12%, of Rico Inc., for $78,000. Soho is a publicly traded company. During the next two years, the following information was available for Rico.
$\begin{array} { | l | r | r | r | } \hline & \text { Net income (loss) } & \text { Dividends declared } & \begin{array} { c } \text { Share price } \\\text { December } 31\end{array} \\\hline 20X2 & \$ 65,000 & \$ 55,000 & \$ 22.20 \\\hline 20X3 & \$ 35,000 & \$ 10,000 & \$ 15.70 \\\hline\end{array}$ Soho sold all of its 4,000 shares in Rico on December 31, 20X3.
Required:
A)Assuming Soho classifies this investment as FVTPL, prepare the journal entries for the next two years related to this investment, and the carrying value of the investment at the end of 20X2 and 20X3.
B)Assuming Soho classifies this investment as FVTOCI, prepare the journal entries for the next two years related to this investment, and the carrying value of the investment at the end of 20X2 and 20X3.

Definitions:

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Upward Accountability

The responsibility of individuals or departments to report and justify their actions to higher levels of organizational hierarchy.

Accountable

Being responsible or answerable for actions or decisions, either to oneself or to others, such as stakeholders or regulatory agencies.

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