At December 31, year 1, Charter Holding Co. owned the following marketable securities in capital stock of publicly traded companies. Cost Current Market Value L Brands, Inc. (5,000 shares: cost, $44 per share; market value, $52) $ 220,000 $ 260,000 The Gap, Inc. (4,000 shares: cost, $42 per share; market value, $39) 168,000 156,000 $ 388,000 $ 416,000 In year 2, Charter engaged in the following two transactions. Apr. 10 Sold 1,000 shares of its investment in L Brands, Inc., at a price of $58 per share, less a brokerage commission of $100. Aug. 7 Sold 2,000 shares of its investment in The Gap, Inc., at a price of $37 per share, less a brokerage commission of $150. At December 31, year 2, the market values of these stocks were: L Brands, Inc., $67 per share; and The Gap, Inc., $37 per share. Required: e. Prepare the fair value adjusting entry required at December 31, year 2. f
At December 31, year 1, Charter Holding Co. owned the following marketable securities in capital stock of publicly traded companies. Cost Current Market Value L Brands, Inc. (5,000 shares: cost, $44 per share; market value, $52) $ 220,000 $ 260,000 The Gap, Inc. (4,000 shares: cost, $42 per share; market value, $39) 168,000 156,000 $ 388,000 $ 416,000 In year 2, Charter engaged in the following two transactions. Apr. 10 Sold 1,000 shares of its investment in L Brands, Inc., at a price of $58 per share, less a brokerage commission of $100. Aug. 7 Sold 2,000 shares of its investment in The Gap, Inc., at a price of $37 per share, less a brokerage commission of $150. At December 31, year 2, the market values of these stocks were: L Brands, Inc., $67 per share; and The Gap, Inc., $37 per share. Required: e. Prepare the fair value adjusting entry required at December 31, year 2. f
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
At December 31, year 1, Charter Holding Co. owned the following marketable securities in capital stock of publicly traded companies.
Cost Current Market
Value
L Brands, Inc. (5,000 shares: cost, $44 per share; market value, $52) $ 220,000 $ 260,000
The Gap, Inc. (4,000 shares: cost, $42 per share; market value, $39) 168,000 156,000
$ 388,000 $ 416,000
In year 2, Charter engaged in the following two transactions.
Apr. 10 Sold 1,000 shares of its investment in L Brands, Inc., at a price of $58 per share, less a brokerage commission of $100.
Aug. 7 Sold 2,000 shares of its investment in The Gap, Inc., at a price of $37 per share, less a brokerage commission of $150.
At December 31, year 2, the market values of these stocks were: L Brands, Inc., $67 per share; and The Gap, Inc., $37 per share.
Required:
e. Prepare the fair value adjusting entry required at December 31, year 2.
f-1. Calculate the amount of marketable securities in the financial statements at December 31, year 2.
f-2. Calculate the amount of unrealized holding gain (or loss) in the financial statements at December 31, year 2.
g. Illustrate the presentation of the net realized gains (or losses) in the year 2 income statement. Assume a multiple-step income statement and show the caption identifying the section in which this amount would appear.
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