FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- At the end of 2018, Terry Company prepared the following schedule of investments in available-for-sale debt securities (all of which were acquired at par value): Company Amortized Cost 12/31/18 Fair Value Cumulative Change in Fair Value Morgan Company $35,000 $34,200 $(800) Nance Company 50,000 53,100 3,100 Totals $85,000 $87,300 $2,300 During 2019, the following transactions occurred: July 1 Purchased Oscar Company debt securities with a par value of 100,000 for $98,000. The securities carry an annual interest rate of 10%, mature on December 31, 2021, and pay interest seminannually on July 1 and December 31. Terry uses the straight-line method to amortize any discounts or premiums. Oct. 11 Sold all of the Morgan Company securities for $33,000 plus interest of $1,300. Dec. 31 Received interest of $6,000 on the Nance Company and Oscar Company debt securities, and the following yearend total market values were available: Nance Company debt securities, $55,000; Oscar…arrow_forwardDO NOT GVIE SOUTION IN IMAGEarrow_forwardpleas helparrow_forward
- 3arrow_forwardKk95.arrow_forwardOn its December 31, 2024, balance sheet, Sandhill Company reported its investment in equity securities, which cost $690000, at fair value of $618000. At December 31, 2025, the fair value of the securities was $649000. What should Sandhill report on its 2025 income statement as a result of the increase in fair value of the investments in 2025? O Realized gain of $31000 O Unrealized gain of $31000 O Unrealized loss of $41000 O $0arrow_forward
- Please help with problem. At the beginning of 2019, Ace Company had the following portfolio of investments in available-for-sale debt securities (all of which were acquired at par value): Security Cost 1/1/19 Fair Value A $25,000 $31,000 B 38,000 36,000 Totals $63,000 $67,000 During 2019, the following transactions occurred: Transactions: May 3 Purchased C debt securities at their par value for $50,000. July 1 Sold all of the A securities for $31,000 plus interest of $1,000. Dec. 31 Received interest of $1,000 on the B and C securities. Additionally the following information was available: Security 12/31/19 Fair Value B $42,000 C 53,000 Required: 1. Prepare journal entries to record the preceding information. 2. What is the balance in the Unrealized Holding Gain/Loss account on December 31, 2019? 3. Next Level What justification does the FASB give for its treatment of unrealized holding gains and losses…arrow_forwardA22arrow_forwardDo not give answer in imagearrow_forward
- Investment in Trading and AFS Securities A company purchases debt securities for $100,000 at the beginning of 2022. It classifies as trading securities and $60,000 as AFS securities. It sells the securities in 2023. Required For each of the following scenarios, indicate the net effect on income and other comprehensive income in each year 2022 and 2023. In each case, any unrealized decline in value below cost is expected to be recovered and is attributed to market factors. a. Fair value, end of 2022 Selling price, 2023 Note: Use a negative sign with an answer to indicate the net effect amount decreases Income or OCI. Income OCI 5,000 ✓ (1,000) * End of 2022 $ 2023 b. Trading securities AFS securities $38,000 $65,000 43,000 64,000 Fair value, end of 2022 Selling price, 2023 (2,000)✓ $ 5,000 x End of 2022 $ 2023 Trading securities AFS securities $45,000 $56,000 42,000 68,000 Note: Use a negative sign with an answer to indicate the net effect amount decreases Income or OCI. OCI (4,000)✓ 0…arrow_forwardAt December 31, 2025, Pharoah Company has a portfolio of equity securities valued at $136000. Its cost was $116000. If the Fair Value Adjustment has a debit balance of $7200, which of the following journal entries is required at December 31, 2025? O Unrealized Holding Gain or Loss-Income Fair Value Adjustment Fair Value Adjustment Unrealized Holding Gain or Loss-Income Fair Value Adjustment Unrealized Holding Gain or Loss-Income Unrealized Holding Gain or Loss-Income Fair Value Adjustment 12800 12800 20000 20000 12800 12800 20000 20000arrow_forwardEe.105.arrow_forward
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