An entity buys and sells securities expecting to earn profits on short-term differences in price. During 2016, the entity purchased the following trading securities: Security A Fair Value Dec. 31, 2016 225,000 162,000 678,000 Cost B C 195,000 300,000 660,000 Before any adjustments related to these trading securities, the entity had net income of P900,000. What is the entity's net income after making any necessary trading security adjustments? a. 900,000 b. 810,000 c. 762,000 d. 948,000 What would the net income be if the fair value of security B were P285,000? a. 867,000 b. 900,000 c. 885,000 d. 933,000

An entity buys and sells securities expecting to earn profits on short-term differences in price. During 2016, the entity purchased the following trading securities: Security A Fair Value Dec. 31, 2016 225,000 162,000 678,000 Cost B C 195,000 300,000 660,000 Before any adjustments related to these trading securities, the entity had net income of P900,000. What is the entity's net income after making any necessary trading security adjustments? a. 900,000 b. 810,000 c. 762,000 d. 948,000 What would the net income be if the fair value of security B were P285,000? a. 867,000 b. 900,000 c. 885,000 d. 933,000

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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On its December 31, 2021, statement of financial position, Apollo Co. reported its investment in equity securities at fair value through other comprehensive income, which had cost P600,000, at fair value of P550,000. At December 31, 2022, the fair value of the securities was P585,000. What should Apollo report on its 2022 income statement as a result of the increase in fair value of the investments in 2022? Unrealized loss of P15,000. O Unrealized gain of P35,000. Realized gain of P35,000. О РО.
At the end of 2018, Terry Company prepared the following schedule of investments in available-for-sale debt securities (all of which were acquired at par value): Company Amortized Cost 12/31/18 Fair Value Cumulative Change in Fair Value Morgan Company $35,000 $34,200 $(800) Nance Company 50,000 53,100 3,100 Totals $85,000 $87,300 $2,300 During 2019, the following transactions occurred: July 1 Purchased Oscar Company debt securities with a par value of 100,000 for $98,000. The securities carry an annual interest rate of 10%, mature on December 31, 2021, and pay interest seminannually on July 1 and December 31. Terry uses the straight-line method to amortize any discounts or premiums. Oct. 11 Sold all of the Morgan Company securities for $33,000 plus interest of $1,300. Dec. 31 Received interest of $6,000 on the Nance Company and Oscar Company debt securities, and the following yearend total market values were available: Nance Company debt securities, $55,000; Oscar…
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At December 31, 2020, the end of its first year of operations, the non-trading securities for Oriole AG are as follows. They have the same cost and fair value. The securities are considered to be a long-term investment. Security A B C Date Cost CHF17,800 Dec. 31 12,900 22,700 CHF53,400 Fair Value CHF15,800 14,500 18,600 Prepare the adjusting entry at December 31, 2020, to report the securities at fair value. (Credit account titles are automatically Indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) CHF48,900 Account Titles and Explanation Unrealized Gain or Loss-Equity Fair Value Adjustment-Non-Trading Debit Credit
On its December 31, 2024, balance sheet, Sandhill Company reported its investment in equity securities, which cost $690000, at fair value of $618000. At December 31, 2025, the fair value of the securities was $649000. What should Sandhill report on its 2025 income statement as a result of the increase in fair value of the investments in 2025? O Realized gain of $31000 O Unrealized gain of $31000 O Unrealized loss of $41000 O $0
Please help with problem. At the beginning of 2019, Ace Company had the following portfolio of investments in available-for-sale debt securities (all of which were acquired at par value): Security Cost 1/1/19 Fair Value A $25,000 $31,000 B 38,000 36,000 Totals $63,000 $67,000 During 2019, the following transactions occurred: Transactions: May 3 Purchased C debt securities at their par value for $50,000. July 1 Sold all of the A securities for $31,000 plus interest of $1,000. Dec. 31 Received interest of $1,000 on the B and C securities. Additionally the following information was available: Security 12/31/19 Fair Value B $42,000 C 53,000 Required: 1. Prepare journal entries to record the preceding information. 2. What is the balance in the Unrealized Holding Gain/Loss account on December 31, 2019? 3. Next Level What justification does the FASB give for its treatment of unrealized holding gains and losses…
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