CONNECT ONLINE ACCESS FOR INTERMEDIATE
CONNECT ONLINE ACCESS FOR INTERMEDIATE
10th Edition
ISBN: 9781264798834
Author: SPICELAND
Publisher: MCG
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Chapter 12, Problem 12.17BE
To determine

Available-for-sale (AFS) securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Other-than-temporary (OTT) impairment: When the market value of an investment declines to a value lower than its cost, it is referred to as OTT impairment.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To explain: The reporting of OTT impairment by Corporation L

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Carol's Coats Company purchases a sewing machine, paying $3,000.00 plus GST. They paid shipping costs of $50.00 plus GST for delivery to their plant. An invoice from an electrician for installation at $200.00 plus GST still needs to be paid. What would this purchase entry be? a. Debit Equipment $3,000.00, Credit Cash $3,000.00 b. Debit Equipment $3,412.50, Credit Cash $3,412.50 c. Debit Equipment $3,000.00, Debit Freight $50.00, Debit Installation $200.00, Debit GST Paid $162.50, Credit Cash $3,412.50 d. Debit Equipment $3,250.00, Debit GST Paid $162.50, Credit Accounts Payable $210.00, Credit Cash $3,202.50

Chapter 12 Solutions

CONNECT ONLINE ACCESS FOR INTERMEDIATE

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