Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
6th Edition
ISBN: 9780134486840
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Chapter 10, Problem 7QC
To determine
Available-for-sale investments:
Available-for-sale investments are the investments in debt or equity securities, where the investor wishes to holds less than 20% of voting stock, and neither referred as trading or hold-to-maturity investments. For debt securities, the investor do not wish to hold it till maturity, and hence reported either as current assets or as long-term assets in the
Unrealized-gain or Unrealized-loss:
Unrealized-holding gain or loss occurs when the investor company record the investments at its fair value, in its financial statements, without disposing (selling) them. When the cost of the investment is lesser than the fair value of the investment, then it is unrealized-gain. On the contrary, when the cost of the investment is greater than the fair value of the investment, then it is unrealized-loss.
To determine: The value that will be reported in the net income for the adjustment, if any.
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Students have asked these similar questions
On January 1, 2020, Aponte, Inc. acquired a preferred stock investment for $ 50,000. As of December 31, 2020, the investment had a market value of $ 55,000. Aponte reported the investment in the Statement of Financial Position for $ 50,000 without registering any adjustment. What effect will this error have on Aponte's 2020 Net Income? Select one:
a. Will be underestimated
b. It will be overestimated.
c. It will be correct.
d. It will not affect net income.
Urgently required answer to following:
The following information related to stock investments of the Aladdin Corp at December 31, 2020 appears below.
Name Cost Market Value
A Corporation $35,000 $41,000
B Corporation 42,000 40,000
C Corporation 20,000 22,000
The balance in the fair value adjustment account prior to the 2020 year-end adjustment was a $2,000 debit balance.
Instructions:
1. Determine the balance in the fair value adjustment account as of December 31, 2020 after adjustment 2. Prepare the adjusting journal entry at December 31, 2020 to record the unrealized gain or loss. 3. On April 15, 2021, A Corporation stock was sold for $43,000. Prepare the journal entry for the sale.
A company invests in stock of other companies
for trading purposes. Its accounting year ends
December 31. Its investment activity during
2019, 2020, and 2021 is as follows:
a. Purchased stock of Acme Company in 2019 for
$250,000 for the purpose of taking advantage
of short-term volatility in the market place.
). Sold the investment shortly after purchase for
$235,000.
:. Purchased stock of Beeber Company in 2019
for $300,000.
1. The investment had a fair value of $275,000 at
the end of 2019.
e. It was sold for $310,000 in late 2020.
f. Purchased stock of Cromwell Company in 2019
for $500,000.
J. Its fair value and the end of 2019 was
$520,000.
1. Its fair value and the end of 2020 $460,000.
i. The investment was sold for $480,000 in 2021.
Prepare the entries necessary to report the
above entries in either a T-account or
spreadsheet format.
Chapter 10 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
Ch. 10 - Prob. 1QCCh. 10 - Which of the following investments is most likely...Ch. 10 - 3. If Intervale Railway invests $100,000 in 5%...Ch. 10 - Prob. 4QCCh. 10 - Prob. 5QCCh. 10 - Prob. 6QCCh. 10 - Prob. 7QCCh. 10 - Harvard Co. purchased a trading investment on...Ch. 10 - Prob. 9QCCh. 10 - Prob. 10QC
Ch. 10 - What is a debt security?Ch. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Briefly describe the five specific types of debt...Ch. 10 - How is the purchase of a held-to-maturity debt...Ch. 10 - Prob. 6RQCh. 10 - What method is used for investments in equity...Ch. 10 - What method is used for investments in equity...Ch. 10 - Prob. 9RQCh. 10 - Prob. 10RQCh. 10 - Prob. 11RQCh. 10 - Prob. 12RQCh. 10 - Prob. 13RQCh. 10 - What does the rate of return on total assets...Ch. 10 - Identifying why companies invest and classifying...Ch. 10 - Prob. 10.2SECh. 10 - Prob. 10.3SECh. 10 - Prob. 10.4SECh. 10 - Prob. 10.5SECh. 10 - Prob. 10.6SECh. 10 - Prob. 10.7SECh. 10 - Prob. 10.8ECh. 10 - Prob. 10.9ECh. 10 - Prob. 10.10ECh. 10 - E10-11 Accounting for debt investments
Peyton...Ch. 10 - Prob. 10.12ECh. 10 - Prob. 10.13ECh. 10 - Prob. 10.14ECh. 10 - Prob. 10.15ECh. 10 - E10-16 Classifying and accounting for equity...Ch. 10 - Prob. 10.17ECh. 10 - Prob. 10.18APCh. 10 - Prob. 10.19APCh. 10 - Prob. 10.20APCh. 10 - Prob. 10.21BPCh. 10 - Prob. 10.22BPCh. 10 - Prob. 10.23BPCh. 10 - Prob. 25CPCh. 10 - Prob. 10.1EICh. 10 - Wild Adventure conducts tours of wildlife reserves...Ch. 10 - > Financial Statement Case 10-1
Details about a...Ch. 10 - > Communication Activity 10-1
In 150 words or...
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