ndy company invests $300,000 in equity securities on November 30, 2019, and classifies them as investments with no significant influence. At December 31, 2019, the company’s year-end, the securities have a fair value of $310,000. On February 1, 2020, Andy company sells the securities for $295,000. Which statement is true regarding how this information is reported in the company’s financial statements? Question 6Answer
ndy company invests $300,000 in equity securities on November 30, 2019, and classifies them as investments with no significant influence. At December 31, 2019, the company’s year-end, the securities have a fair value of $310,000. On February 1, 2020, Andy company sells the securities for $295,000. Which statement is true regarding how this information is reported in the company’s financial statements? Question 6Answer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Andy company invests $300,000 in equity securities on November 30, 2019, and classifies them as investments with no significant influence. At December 31, 2019, the company’s year-end, the securities have a fair value of $310,000. On February 1, 2020, Andy company sells the securities for $295,000. Which statement is true regarding how this information is reported in the company’s financial statements?
Question 6Answer
a.
The company’s December 31, 2019 balance sheet reports the securities at $300,000, and
a gain of $10,000 is reported on the 2019 income statement.
a gain of $10,000 is reported on the 2019 income statement.
b.
The company’s December 31, 2019 balance sheet reports the securities at $310,000, and
a loss of $15,000 is reported on the 2020 income statement.
a loss of $15,000 is reported on the 2020 income statement.
c.
The company’s December 31, 2019 balance sheet reports the securities at $310,000, and
a loss of $5,000 is reported on the 2020 income statement.
a loss of $5,000 is reported on the 2020 income statement.
d.
The company’s December 31, 2019 balance sheet reports the securities at $300,000, and
no gain or loss appears on the 2019 income statement.
no gain or loss appears on the 2019 income statement.
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