MGT 2380-Kelowna Investment Capital (KIC), an investment

by | Mar 18, 2020 | Uncategorized

  

Kelowna Investment Capital (KIC), an investment banking company, has extra cash to invest. Suppose KIC buys 1,000 shares of Wheat Co. of Saskatchewan at $185 per share. Assume KIC expects to hold the Wheat Co. shares for one month and then sell them. The purchase occurs on December 15, 2016. At December 31, the market price of Wheat Co. is $195 per share.

Required:

  1. a) What type of investment is this to KIC? Give the reason for your answer.
  2. b) Record KIC’s purchase of the Wheat Co. shares on December 15, and the
  3. adjustment to fair value on December 31 (if any)
  4. c) Show how KIC would report this investment on its balance sheet at
  5. December 31 and any gain or loss on its income statement for the year ended December 31, 2016
  

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