A corporation has invested $50,000 in the securities of other companies. At the end of the year, that corporation’s portfolio has a market value of $52,000. Describe where these securities would be shown on the annual financial statements and at what amount under each of the conditions described. 1. The investment is classified as trading securities. 2. The investment is classified as available for sale. 3. The investment is classified as held to maturity.

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Answer 1

Textbook Question

Chapter 10B, Problem 1YT

A corporation has invested $50,000 in the securities of other companies. At the end of the year, that corporation’s portfolio has a market value of $52,000. Describe where these securities would be shown on the annual financial statements and at what amount under each of the conditions described.

1. The investment is classified as trading securities.
2. The investment is classified as available for sale.
3. The investment is classified as held to maturity.

Expert Solution & Answer

To determine

Explain that where the given securities would be shown on the annual financial statements and state the amount under each of the conditions explained.

Explanation of Solution

Situation 1:

In this situation, the securities will be shown in the current asset section of the balance sheet at a value of $52,000. The write-up will be balanced with a $2,000 unrealized gain on the income statement.

Situation 2:

In this situation, the securities will be shown depending on a company’s intent, either the current asset or the long-term asset section of the balance sheet at a value of $52,000. The write-up will be balanced with a $2,000 unrealized gain that will go directly to equity, as part of accumulated other comprehensive income.

Situation 3:

In this situation, the securities will be shown at their cost of $50,000 in the long-term asset section of the balance sheet (except the debt securities are maturing in the next year, in which case they would be reported under the current assets).

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Answer 2

Textbook Question

Chapter 10B, Problem 1YT

A corporation has invested $50,000 in the securities of other companies. At the end of the year, that corporation’s portfolio has a market value of $52,000. Describe where these securities would be shown on the annual financial statements and at what amount under each of the conditions described.

1. The investment is classified as trading securities.
2. The investment is classified as available for sale.
3. The investment is classified as held to maturity.

Expert Solution & Answer

To determine

Explain that where the given securities would be shown on the annual financial statements and state the amount under each of the conditions explained.

Explanation of Solution

Situation 1:

In this situation, the securities will be shown in the current asset section of the balance sheet at a value of $52,000. The write-up will be balanced with a $2,000 unrealized gain on the income statement.

Situation 2:

In this situation, the securities will be shown depending on a company’s intent, either the current asset or the long-term asset section of the balance sheet at a value of $52,000. The write-up will be balanced with a $2,000 unrealized gain that will go directly to equity, as part of accumulated other comprehensive income.

Situation 3:

In this situation, the securities will be shown at their cost of $50,000 in the long-term asset section of the balance sheet (except the debt securities are maturing in the next year, in which case they would be reported under the current assets).

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Answer 3

Textbook Question

Chapter 10B, Problem 1YT

A corporation has invested $50,000 in the securities of other companies. At the end of the year, that corporation’s portfolio has a market value of $52,000. Describe where these securities would be shown on the annual financial statements and at what amount under each of the conditions described.

1. The investment is classified as trading securities.
2. The investment is classified as available for sale.
3. The investment is classified as held to maturity.

Expert Solution & Answer

To determine

Explain that where the given securities would be shown on the annual financial statements and state the amount under each of the conditions explained.

Explanation of Solution

Situation 1:

In this situation, the securities will be shown in the current asset section of the balance sheet at a value of $52,000. The write-up will be balanced with a $2,000 unrealized gain on the income statement.

Situation 2:

In this situation, the securities will be shown depending on a company’s intent, either the current asset or the long-term asset section of the balance sheet at a value of $52,000. The write-up will be balanced with a $2,000 unrealized gain that will go directly to equity, as part of accumulated other comprehensive income.

Situation 3:

In this situation, the securities will be shown at their cost of $50,000 in the long-term asset section of the balance sheet (except the debt securities are maturing in the next year, in which case they would be reported under the current assets).

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Answer 4

Textbook Question

Chapter 10B, Problem 1YT

A corporation has invested $50,000 in the securities of other companies. At the end of the year, that corporation’s portfolio has a market value of $52,000. Describe where these securities would be shown on the annual financial statements and at what amount under each of the conditions described.

1. The investment is classified as trading securities.
2. The investment is classified as available for sale.
3. The investment is classified as held to maturity.

Expert Solution & Answer

To determine

Explain that where the given securities would be shown on the annual financial statements and state the amount under each of the conditions explained.

Explanation of Solution

Situation 1:

In this situation, the securities will be shown in the current asset section of the balance sheet at a value of $52,000. The write-up will be balanced with a $2,000 unrealized gain on the income statement.

Situation 2:

In this situation, the securities will be shown depending on a company’s intent, either the current asset or the long-term asset section of the balance sheet at a value of $52,000. The write-up will be balanced with a $2,000 unrealized gain that will go directly to equity, as part of accumulated other comprehensive income.

Situation 3:

In this situation, the securities will be shown at their cost of $50,000 in the long-term asset section of the balance sheet (except the debt securities are maturing in the next year, in which case they would be reported under the current assets).

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Explain that where the given securities would be shown on the annual financial statements and state the amount under each of the conditions explained.

Explanation of Solution

Situation 1:

In this situation, the securities will be shown in the current asset section of the balance sheet at a value of $52,000. The write-up will be balanced with a $2,000 unrealized gain on the income statement.

Situation 2:

In this situation, the securities will be shown depending on a company’s intent, either the current asset or the long-term asset section of the balance sheet at a value of $52,000. The write-up will be balanced with a $2,000 unrealized gain that will go directly to equity, as part of accumulated other comprehensive income.

Situation 3:

In this situation, the securities will be shown at their cost of $50,000 in the long-term asset section of the balance sheet (except the debt securities are maturing in the next year, in which case they would be reported under the current assets).

Answer 8

Expert Solution & Answer

To determine

Explain that where the given securities would be shown on the annual financial statements and state the amount under each of the conditions explained.

Explanation of Solution

Situation 1:

In this situation, the securities will be shown in the current asset section of the balance sheet at a value of $52,000. The write-up will be balanced with a $2,000 unrealized gain on the income statement.

Situation 2:

In this situation, the securities will be shown depending on a company’s intent, either the current asset or the long-term asset section of the balance sheet at a value of $52,000. The write-up will be balanced with a $2,000 unrealized gain that will go directly to equity, as part of accumulated other comprehensive income.

Situation 3:

In this situation, the securities will be shown at their cost of $50,000 in the long-term asset section of the balance sheet (except the debt securities are maturing in the next year, in which case they would be reported under the current assets).

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Explain that where the given securities would be shown on the annual financial statements and state the amount under each of the conditions explained.

Answer 12

Explanation of Solution

Situation 1:

In this situation, the securities will be shown in the current asset section of the balance sheet at a value of $52,000. The write-up will be balanced with a $2,000 unrealized gain on the income statement.

Situation 2:

In this situation, the securities will be shown depending on a company’s intent, either the current asset or the long-term asset section of the balance sheet at a value of $52,000. The write-up will be balanced with a $2,000 unrealized gain that will go directly to equity, as part of accumulated other comprehensive income.

Situation 3:

In this situation, the securities will be shown at their cost of $50,000 in the long-term asset section of the balance sheet (except the debt securities are maturing in the next year, in which case they would be reported under the current assets).

Answer 13

Ch. 10B - A corporation has invested 50,000 in the...Ch. 10B - Investments. (LO 6). In January 2010, Bowers...Ch. 10B - Prob. 2SEB Ch. 10B - Prob. 3EA Ch. 10B - Prob. 4EA Ch. 10B - Prob. 5EB Ch. 10B - Prob. 6EB

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