FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question

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The investments of Harlon Enterprises included the following cost and fair value amounts ($ in millions) Equity Investments A Corporation shares B Corporation shares C Corporation shares D Industries shares Totals Cost $ 20 35 15 45 $ 115 Fair Value, December 31 2024 2025 $ 14 35 46 $ 95 million $ 37 14 50 $ 101 Harlon accounts for its equity investment portfolio at fair value through net income. Harlon sold its holdings of A Corporation shares on June 1, 2025, for $15 million. On September 12, it purchased the C Corporation shares. Required: 1. What is the effect of the sale of the A Corporation shares and the purchase of the C Corporation shares on Harlon's 2025 pretax earnings? 2. At what amount should Harlon's securities equity investment portfolio be reported in its 2025 balance sheet? Note: For all requirements, enter your answers in millions, (i.e., 10,000,000 should be entered as 10). Leave no cells blank - be certain to enter "0" wherever required.
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Transcribed Image Text:The investments of Harlon Enterprises included the following cost and fair value amounts ($ in millions) Equity Investments A Corporation shares B Corporation shares C Corporation shares D Industries shares Totals Cost $ 20 35 15 45 $ 115 Fair Value, December 31 2024 2025 $ 14 35 46 $ 95 million $ 37 14 50 $ 101 Harlon accounts for its equity investment portfolio at fair value through net income. Harlon sold its holdings of A Corporation shares on June 1, 2025, for $15 million. On September 12, it purchased the C Corporation shares. Required: 1. What is the effect of the sale of the A Corporation shares and the purchase of the C Corporation shares on Harlon's 2025 pretax earnings? 2. At what amount should Harlon's securities equity investment portfolio be reported in its 2025 balance sheet? Note: For all requirements, enter your answers in millions, (i.e., 10,000,000 should be entered as 10). Leave no cells blank - be certain to enter "0" wherever required.
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Step 1: Investments:
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Step 2: (1) Determine the effect of the sale and the purchase on Harlon’s 2025 pretax earnings:
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Step 3: (2) Determine the equity investment portfolio to be reported on balance sheet:
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