XY Pte Ltd is finalising its financial statements for the year ended 31 December 20X1. The...

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Accounting

XY Pte Ltd is finalising its financial statements for the yearended 31 December 20X1. The date of authorisation of financialstatements for issue was 14 March 20X2 and the annual generalmeeting is scheduled on 23 April 20X2. The following eventsoccurred as follows: (a) Inventory held by XY Pte Ltd was recordedat its cost of $1,104,000 at 31 December 20X1 in the statement offinancial position. The whole inventory was damaged by flood waterin December 20X1. The entity sold 80% of the inventory for $616,000on 7 February 20X2. (b) On 9 August 20X1, the company invested $3million in a promising high technology company ABX Ltd. The valueof the investment rose to $3.5 million as at 31 December 20X1.However, on 14 January 20X2, a major earthquake struck the regionwhere the factory of ABX was located, causing its share price toplummet. The value of the investment dropped to $1.5 million thenext day
Illustrate the appropriate accounting treatment of the events inthe financial statements of XY Pte Ltd for the year ended 31December 20X1. Prepare the necessary journal entries, ifnecessary.

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