Appendix A Reporting and Interpreting Investments in Other Corporations
A.Discuss the similarities of accounting for available-for-sale and trading debt securities portfolios. B.Discuss the differences encountered in accounting for available-for-sale and trading debt securities portfolios.
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On January 1,2019,Heitzman Company purchased the following shares of stock as a long-term investment:
The fair values of the stocks subsequently were as follows:
Calculate the amount of unrealized gain or loss Heitzman would report on its income statement at both December 31,2019 and December 31,2020.
On January 1,2019,as a long-term investment,John Company purchased 1,000 of the 10,000 outstanding voting common shares of Wayne Corporation at $9 per share.Wayne reported 2019 net income of $30,000 and declared and paid cash dividends of $20,000.The market price of the Wayne stock at the end of 2019 was $10 per share.Calculate the carrying value of John's investment at the end of 2019.
On January 31,2018,McBurger Corporation purchased the following shares of voting common stock as long-term investments.None of these holdings amounted to more than 5% of the respective company's outstanding voting shares.The accounting period ends December 31.
All of the Bailey Corporation stock was sold for $13,500 on January 12,2020. Prepare the required journal entries at the following dates: January 31,2018,December 31,2018,December 31,2019 and January 12,2020.
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