he investments of Charger Inc. include an investment of trading securities of Raiders Inc. purchased on February 24, 2017, for 280,000. The fair value of the securities on December 31, 20Y7, is $364,000. Journalia
he investments of Charger Inc. include an investment of trading securities of Raiders Inc. purchased on February 24, 2017, for 280,000. The fair value of the securities on December 31, 20Y7, is $364,000. Journalia
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:ournal entries for trading investments
The investments of Charger Inc. include an investment of trading securities of Raiders Inc. purchased on February 24, 20Y7, for
$280,000. The fair value of the securities on December 31, 20Y7, is $364,000.
not require an entry, leave it blank.
a. Journalize the entries for the February 24 purchase and the adjustment to fair value on December 31, 20Y7. If an amount box doe:
20Y7 Feb. 24
20Y7 Dec. 31
b. How is a unrealized gain or loss for trading investments reported on the financial statements?
The unrealized gain or unrealized loss on trading investments is reported on the
Unrealized losses would be
determining net income..
+
The unrealized gain on available-for-sale investments would be reported as
Allowance for Available-for-Sale Investments would be
report the fair value of $364,000 on the
ST
statements?
c. If the Raiders Inc. securities had been classified as available-for-sale securities, how would the investment be reported on the financial
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in determining net income, while unrealized gains would be
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. The debit balance of Valuation
to the balance of the investments account of $280,000 to
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Step 1: Trading investments:
VIEWStep 2: (a) Journalize the entries for February 24 purchase and adjustment to fair value on December 31:
VIEWStep 3: (b) Explain how unrealized gain or loss for trading investments is reported:
VIEWStep 4: (c) Explain how unrealized gain or loss for trading investments is reported assuming AFS securities:
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