On December 30, Year 3, Varsity Corporation sold its investment in marketable equity securities costing $800,000 for $860,000 cash. The securities werepurchased on January 2, Year 1, and the market value of the securities was $820,000 and $780,000 on December 31, Year 1 and Year 2, respectively. How muchgain or loss will Varsity report in its income statement for the year ending December 31, Year 3?Multiple ChoiceA $40,000 gain.An $80,000 gain.A $20,000 loss.A $60,000 gain..

Marketable Securities -Financial products that are easily bought or sold on the market are known as…

Answered: 3, vars orporation sold its investment…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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4. The investments section includes the following: An interest bearing note receivable of $8,000 that was issued on June 1st, 2023 bearing interest at 6% and is due on June 1, 2024 Long-term FV-OCI investment $12,200 carrying value (fair value $9,000 at December 31,2023). Management plans on holding on to these investments for a number of years. FV-NI Investment 1,000 common shares of Landon Inc. purchased at $91.00 per share (fair value $108.50 per share at December 31, 2023). Grace expected to sell the shares as soon as the market price increases more next year.
Fuzzy Monkey Technologies Inc purchased as a long-term investmetn $60 million of 6% bonds, dated Jan 1, on Jan 1 2021. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $46 million. Interest is received semianually on June 30 and Dec 31. Due to changing market conditions the fair value of the bonds at Dec 31 2021 was $50 million. 1 to 3. Prepare the relevant journal entries on the respective dates. 4. At what amount will Fuzzy Monkey report its investment in Dec 31, 2021 balance sheet? 5. How would Fuzzy Monkey's 2021 statement of cash flows be affected by this investment?
TB MC Qu. 15-99 (Algo) Carpark Services... Carpark Services began operations in 20X1 and maintains investments in available-for-sale debt securities. The year-end cost and fair values for its portfolio of debt securities follows. Available-for-Sale Securities December 31, 20X1 December 31, 20X2 Cost $ 340,000 $ 412,000 Multiple Choice Fair Value $ 344,600 $ 429, 200 The year-end adjusting entry to record the unrealized gain/loss at December 31, 20X2 is: Debit Unrealized Gain - Equity $17,200; Credit Fair Value Adjustment - Available-for-Sale $17,200. Debit Fair Value Adjustment - Available-for-Sale $12,600; Credit Unrealized Loss - Equity $4,600; Credit Unrealized Gain - Equity, $8,000. Debit Fair Value Adjustment - Available-for-Sale $17,200; Credit Unrealized Gain - Equity, $17,200. Debit Fair Value Adjustment - Available-for-Sale $17,200; Credit Unrealized Loss - Equity $17,200. Debit Fair Value Adjustment - Available-for-Sale $12,600; Credit Unrealized Gain Equity $12,600.
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INVESTMENT AT AMORTIZED COST CASE III: On January 1, 2026, ABC purchased 9% bonds with a face amount of P4M to yield 10%. The bonds are dated January 1, 2026, 2024, mature on December 31, 2035 and pay interest annually on December 31. The entity used the interest method. What should be reported as interest revenue for 2026?
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-k A 0 nces Smith Co.'s long-term available-for-sale portfolio at the start of this year consists of the following. Available for Sale Securities Cost $ 576,530 163,300 Fair Value $ 498,150 Company A bonds Company B notes 159,750 Company C bonds. 641,750 723,930 Smith enters into the following transactions involving its available-for-sale debt securities this year. January 29 July 6 November 13 Sold one-half of the notes of Company B for $80,940. Purchased bonds of Company X for $126,800. Purchased notes of Company 2 for $210,000. December 9 Sold all of the bonds of Company A for $564,999. Fair values at December 31 are: B, $83,300; C.$646,000; X, $119,000; and Z. $217,000. Requirement General Journal Fair Value Transaction Adjustment Analysis Prepare journal entries to record each of the transactions and events. Prepare the year-end adjustment to fair value, if a View transaction list General Ledger Journal entry worksheet < Trial Balance Note: Enter debits before credits. 5 Using the…
Stoll Company's long-term available-for-sale portfolio at the start of this year consists of the following. Fair Value $ 490,000 154,000 713,630 Available-for-Sale Securities Cost Company A bonds Company B notes Company C bonds $ 535,300 159,380 662,750 Stoll enters into the following transactions involving its available-for-sale debt securities this year. January 29 Sold one-half of the Company B notes for $79,200. July 6 Purchased Company X bonds for $126,600. November 13 Purchased Company Z notes for $267,900. December 9 Sold all of the Company A bonds for $515,000. Fair values at December 31 are B, $81,000; C, $665,000; X, $118,000; and Z, $278,000.
Problem 7: In January 2020, Golden Company invested in P900,000 equity securities representing 15% interest in Rings Company. Golden Company incurred transaction cost of P100,000. On December 31, 2020, this investment has a market value of P950,000. On July 1, 2021, Golden Company sold all the investments for P1,200,000. 7.1 What amount of gain on sale should Golden Company recognize in profit or loss assuming the security was classified as Investment at FVPL? 7.2 How much is the amount transferred to Retained earnings upon sale assuming the security was classified as Investment at FVOCI? 7.3 Prepare all the necessary journal entries.

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