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Available-for-Sale Securities At the beginning of 2016, Ace Company had the following portfolio of investments in available-for-sale securities (common stock): Security A B Totals Cost $20,000 30,000 $50,000 Security B C During 2016, the following transactions occurred: May 3 July 16 Dec. 31 12/31/15 Fair Value 12/31/16 Fair Value $25,000 29,000 $54,000 Purchased C securities (common stock) for $13,500. Sold all of the A securities for $25,000. Received dividends of $800 on the B and C securities, for which the following information was available: $32,000 15,500 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, 2016? 3. Next Level What justification does the FASB give for its treatment of unrealized holding gains and losses for available-for-sale securities?

Available-for-Sale Securities At the beginning of 2016, Ace Company had the following portfolio of investments in available-for-sale securities (common stock): Security A B Totals Cost $20,000 30,000 $50,000 Security B C During 2016, the following transactions occurred: May 3 July 16 Dec. 31 12/31/15 Fair Value 12/31/16 Fair Value $25,000 29,000 $54,000 Purchased C securities (common stock) for $13,500. Sold all of the A securities for $25,000. Received dividends of $800 on the B and C securities, for which the following information was available: $32,000 15,500 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, 2016? 3. Next Level What justification does the FASB give for its treatment of unrealized holding gains and losses for available-for-sale securities?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Available-for-Sale Securities At the beginning of 2016, Ace Company had the following portfolio of investments in available-for-sale securities (common stock): Security A B Totals May 3 July 16 Dec. 31 Cost $20,000 30,000 $50,000 Security B During 2016, the following transactions occurred: 12/31/15 Fair Value 12/31/16 Fair Value $25,000 29,000 $54,000 Purchased C securities (common stock) for $13,500. Sold all of the A securities for $25,000. Received dividends of $800 on the B and C securities, for which the following information was available: $32,000 15,500 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, 2016? 3. Next Level What justification does the FASB give for its treatment of unrealized holding gains and losses for available-for-sale securities?
Transcribed Image Text:Available-for-Sale Securities At the beginning of 2016, Ace Company had the following portfolio of investments in available-for-sale securities (common stock): Security A B Totals May 3 July 16 Dec. 31 Cost $20,000 30,000 $50,000 Security B During 2016, the following transactions occurred: 12/31/15 Fair Value 12/31/16 Fair Value $25,000 29,000 $54,000 Purchased C securities (common stock) for $13,500. Sold all of the A securities for $25,000. Received dividends of $800 on the B and C securities, for which the following information was available: $32,000 15,500 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, 2016? 3. Next Level What justification does the FASB give for its treatment of unrealized holding gains and losses for available-for-sale securities?
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