Sharpie is a listed firm that operates in the UK and prepares its accounts using the International Financial Reporting Standards (IFRS). The company manufactures and sells spare parts for the automotive industry and has a financial year end of 31 December. On 1 July 2021, Sharpie purchases 60,000 50p shares in Lake plc at a price of £3 per share with the intention to hold the shares for a longer term to realise the gains in the future. Transaction costs were £4,000. Lake plc’s shares were trading at £2.50 on 31 December 2021. How would the shares be accounted for as at 31 December 2021?

Sharpie is a listed firm that operates in the UK and prepares its accounts using the International Financial Reporting Standards (IFRS). The company manufactures and sells spare parts for the automotive industry and has a financial year end of 31 December. On 1 July 2021, Sharpie purchases 60,000 50p shares in Lake plc at a price of £3 per share with the intention to hold the shares for a longer term to realise the gains in the future. Transaction costs were £4,000. Lake plc’s shares were trading at £2.50 on 31 December 2021. How would the shares be accounted for as at 31 December 2021?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 19E

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