Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
5th Edition
ISBN: 9780134078939
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 10, Problem 8QC
Harvard Co. purchased a trading investment on December 1 of the current year for $30,000. The market value of the stock investment at-year-end is $36,000. What value will be reported in net income for the adjustment, if any?
a. $36,000
b. $(6,000)
c. $6,000
d. $30,000
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Revenues and operating (marketing and administrative)
expenses for the year 2021 are P7,500,000 and P4,000,000 respectively. How much is the change in Retained Earnings for the year 2021 due to the equity securities indicate whether increase or decrease?
Complete the following table by putting the proper amount in each column:
Assume that $100,000 was invested in each of the following classifications and the market value at the end of the year was $95,000. (For the Current Long term column indicate which classification is correct assuming there are no current maturities on long-term investments)
Investment Type
Carrying Value
Current (C) or Long Term (LT)
Adjustment To Income
Adjustment to Other Comp Inc
Debt Investment
Trading
Available-For-Sale
Held-to-Maturity
Equity Investment
< 20% Ownership
>21%,<50% Ownership
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.
Chapter 10 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
Ch. 10 - Prob. 1QCCh. 10 - Which of the following investments is most likely...Ch. 10 - If Intervale Railway invests 100,000 in 5% bonds...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 - What adjustment must be made at the end of the...Ch. 10 - Where on the financial statements is an unrealized...Ch. 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 - Accounting for equity method On January 1, 2016,...Ch. 10 - Accounting for trading investments On February 1,...Ch. 10 - Prob. 10.6SECh. 10 - Computing rate of return on total assets Kabra's...Ch. 10 - Prob. 10.8ECh. 10 - Prob. 10.9ECh. 10 - Accounting for bond investments Otter Creek Co....Ch. 10 - Accounting for stock investments Dollar Bill...Ch. 10 - Prob. 10.12ECh. 10 - Prob. 10.13ECh. 10 - Accounting for stock investments Suppose that on...Ch. 10 - Prob. 10.15ECh. 10 - Prob. 10.16ECh. 10 - A Accounting for bond investments Suppose Jenner...Ch. 10 - Prob. 10.18APCh. 10 - Accounting for stock investments The beginning...Ch. 10 - Accounting for bond investments Suppose Ritter...Ch. 10 - Classifying and accounting for stock investments...Ch. 10 - Accounting for stock investments The beginning...Ch. 10 - Prob. 10.23CPCh. 10 - Prob. 10.1CTEICh. 10 - Wild Adventure conducts tours of wildlife reserves...Ch. 10 - Prob. 10.1CTFSCCh. 10 - Prob. 10.1CTTPCh. 10 - In 150 words or fewer, explain the difference...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Q1: How much is the investment income on 2021? Q2: How much is the carrying amount of the Investment in Associate as of December 31, 2021?arrow_forwardAt the end of the first year of operations, the total cost of the trading securities portfolio is $237000. Total fair value is $242000. The financial statements should show an addition to cost of the fair value adjustment and O a realized gain of $5000 in the statement of comprehensive income. a realized gain of $5000 in "Other revenues and gains," on the income statement. O an unrealized gain of $5000 in the stockholders' equity section of the balance sheet. O an unrealized gain of $5000 in "Other revenues and gains," on the income statement Darrow_forwarda. record the adjusting entry as of November 30, 2020 B. At what value will Co. a report its investment in foof Co. Stocks on its Novemver 30, 2020 balance sheetarrow_forward
- Trading Investments purchased for $10 were compared with the fair value of $12 at the end of the year. The journal entry to adjust the investments would include a: Group of answer choices credit to Unrealized Loss on Trading Investments $2. credit to Unrealized Gain on Trading Investments $2. debit to Unrealized Loss on Trading Investments $2. debit to Unrealized Gain on Trading Investments $2.arrow_forwardInvestment 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_forwardInstrument Corporation has the following investment which was held throughout 2021–2022. Assume the organization has invested in stock and holds 40%. Fair Value Cost 12/31/21 Equity investment $900,000 $1,200,000 A. Record the initial investment. B. Total dividends paid equal $400,000. Record the dividends. C. Total Net Income for the year equals $600,000. Record the income. D. If Instrument increased its investment to 55%, what would occur? Explain your answer.arrow_forward
- Mumford Corporation invested $30,000 in marketable securities at various times during the year. On December 9, it sold some of these investments for $10,000, and on December 18, it sold more of these investments for $5,000. The securities sold on December 9 had cost the company $7,000, whereas the securities sold on December 18 had cost the company $6,000. a. Record the purchase of marketable securities during the year. b. Record the sale of marketable securities on December 9. c. Record the sale of marketable securities on December 18. d. Record the necessary fair value adjustment on December 31, assuming that the market value of the company’s remaining unsold securities was $20,000.arrow_forwardProvide answer this accounting questionarrow_forwardTrading Investments purchased for $10 were compared with the fair value of $8 at the end of the year. The journal entry to adjust the investments would include a: Group of answer choices credit to Valuation Allowance for Trading Investments $2. debit to Valuation Allowance for Trading Investments $2. credit to Unrealized Gain on Trading Investments $2. debit to Unrealized Gain on Trading Investments $2.arrow_forward
- During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 lossarrow_forwardRefer to the information in RE13-11. Assume that on December 31, 2019, the investment in Cornett Company stock has a market value of 10,500. Prepare the year-end journal entry to record the unrealized gain or loss.arrow_forwarda. Define the equity method b. Use the following example to describe the equity method Presume that Company A bought 30% of Company B’s outstanding common stocks at $400,000 (cash) on 01/01/2020 During 2020, Company B earned net income of $200,000 and paid dividends of $40,000 Provide the journal entries for this equity investment in fiscal year 2020 What is the balance for this equity investment on 12/31/2020? Explain why the accounting numbers obtained using the equity method are misleadingarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningFinancial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Financial instruments products; Author: fi-compass;https://www.youtube.com/watch?v=gvxozM3TUIg;License: Standard Youtube License