Investment in Trading and AFS Securities A company purchases debt securities for $100,000 at the beginning of 2022. It classifies as trading securities and $60,000 as AFS securities. It sells the securities in 2023. Required For each of the following scenarios, indicate the net effect on income and other comprehensive income in each year 2022 and 2023. In each case, any unrealized decline in value below cost i expected to be recovered and is attributed to market factors. a. Fair value, end of 2022 Selling price, 2023 Note: Use a negative sign with an answer to indicate the net effect amount decreases Income or OCI. OCI Income End of 2022 $ (2,000) $ 2023 5,000 x b. Trading securities AFS securities $38,000 $65,000 43,000 64,000 Fair value, end of 2022 Selling price, 2023 End of 2022 $ 2023 5,000 ✓ (1,000) x Trading securities AFS securities $45,000 42,000 Note: Use a negative sign with an answer to indicate the net effect amount decreases Income or OCI. Income OCI (4,000) 0 x 5,000$ (3,000) x $56,000 68,000

Investment in Trading and AFS Securities A company purchases debt securities for $100,000 at the beginning of 2022. It classifies as trading securities and $60,000 as AFS securities. It sells the securities in 2023. Required For each of the following scenarios, indicate the net effect on income and other comprehensive income in each year 2022 and 2023. In each case, any unrealized decline in value below cost i expected to be recovered and is attributed to market factors. a. Fair value, end of 2022 Selling price, 2023 Note: Use a negative sign with an answer to indicate the net effect amount decreases Income or OCI. OCI Income End of 2022 $ (2,000) $ 2023 5,000 x b. Trading securities AFS securities $38,000 $65,000 43,000 64,000 Fair value, end of 2022 Selling price, 2023 End of 2022 $ 2023 5,000 ✓ (1,000) x Trading securities AFS securities $45,000 42,000 Note: Use a negative sign with an answer to indicate the net effect amount decreases Income or OCI. Income OCI (4,000) 0 x 5,000$ (3,000) x $56,000 68,000

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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Question

Investment in Trading and AFS Securities
A company purchases debt securities for $100,000 at the beginning of 2022. It classifies as trading securities and $60,000 as AFS securities. It sells the securities in 2023.
Required
For each of the following scenarios, indicate the net effect on income and other comprehensive income in each year 2022 and 2023. In each case, any unrealized decline in value below cost is expected to be
recovered and is attributed to market factors.
a.
Fair value, end of 2022
Selling price, 2023
Note: Use a negative sign with an answer to indicate the net effect amount decreases Income or OCI.
Income
OCI
5,000 ✓
(1,000) *
End of 2022 $
2023
b.
Trading securities AFS securities
$38,000
$65,000
43,000
64,000
Fair value, end of 2022
Selling price, 2023
(2,000)✓ $
5,000 x
End of 2022 $
2023
Trading securities AFS securities
$45,000
$56,000
42,000
68,000
Note: Use a negative sign with an answer to indicate the net effect amount decreases Income or OCI.
OCI
(4,000)✓
0 x
Income
5,000 $
(3,000) *

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