Part A (10 marks) Far East Limited invested in three different SPPI debt securities in its portfolios in December 2020.

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Part A (10 marks)
Far East Limited invested in three different SPPI debt
securities in its portfolios in December 2020. The purposes of
holding securities are held for collecting contractual cash flows
and for sale from time to time.
The year-end cost and fair values for its portfolio were as
follows:
Cost
Fair Value
Year 2020
$394,500
$389,900
Year 2021
406,400
412,600
Year 2022
454,800
472,000
Required:
Beginning with Year 2020, prepare the appropriate journal entry
to record each year-end market adjustment for these financial
instruments from Year 2020 to Year 2022.
Part B (10 marks)
Far East Limited purchased 40% interest in ordinary shares of
Blackburn company for $350,000 on 1 January 2020. For the year
ended December 31, 2020, Blackburn reported net profit after tax of
$105,000. During the year, Blackburn paid cash dividends of
$45,000. It is presumed that Far East Limited have significant
influence over Blackburn company.
On January 1, 2021, Far East Limited disposed all the shares of
Blackburn for cash $400,000.
Required:
i. For the financial statements of Far East Limited for December
31, 2020, show and illustrate the total investment in Blackburn
under equity accounting. (7 marks)
ii. Prepare accounting entries for the disposal of Blackburn on
January 1, 2021 and make the necessary equity accounting
adjustments for the consolidated financial statements. (3
marks)