- This topic has 3 replies, 2 voices, and was last updated 8 years ago by
.
- Posts
Hi Mike
May you help to explain and show me the working how to find $1,375, I cannot understand and figure out. Thanks in advance.Q18
Within Promulgate’s trial balance is a line entry ” Investments at fair value through profit or loss 27,500These investments are unusual in that the value changes in direct proportion with a specified market index. On 31 December, that index stood at 2740 but by 31 December, 2015 it had risen to 2803.5
What double entry is required to record the change in value of these investments in the year ended 31 December, 2015?
Ans: Dr Investments $1,375 Cr Investment Income $1,375
That looks to me like the index at 31 December, 2014 should have been typed as 2670 and not 2740
Strange that no-one else has spotted that
Thanks for pointing it out
Hi Mike
My sincere apologise, I have typed wrongly as 2740 and should be 2670. Please advise how do you work out the amount was $1,375, thanksIf the value was $27,500 when the index was 2670 …
… and the index has now risen to 2803.5 …
… and that’s an increase of 133.5 …
… which in percentage terms is an increase or 133.5/2670 x 100 = 5% ..
… and we apply that 5% to the value of the investments …
… that means $27,500 x 5% = $1,375 …
… then that’s where you get $1,375 from!
OK?
- You must be logged in to reply to this topic.