Available for sale securities are recorded in the balance sheet using fair value method always. Method of accounting – Fair value method of accounting – This method is used in case of the purchase when the share purchased are less than 20% of the voting rights and thus, the investor does not have significant control over the other company. Fair value adjustment method is used in order to adjust the purchase price of shares with the year-end fair market prices. It helps in providing a fair picture of the investment of shares that an investor holds. Cost method – This is used in when the investment is held for an indefinite period, i.e. the investor has an intention to hold the investment for a longer time. Under this method, the investment is recorded at the original cost at the balance sheet Requirement 1 To determine: The method of accounting that should be used for recording of the investment at balance sheet

Question

Want to see the full answer?

Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 15, Problem 10QS

To determine

Concept Introduction:

Available for sale securities are recorded in the balance sheet using fair value method always.

Method of accounting $-$

Fair value method of accounting $-$ This method is used in case of the purchase when the share purchased are less than 20% of the voting rights and thus, the investor does not have significant control over the other company. Fair value adjustment method is used in order to adjust the purchase price of shares with the year-end fair market prices. It helps in providing a fair picture of the investment of shares that an investor holds.

Cost method $-$ This is used in when the investment is held for an indefinite period, i.e. the investor has an intention to hold the investment for a longer time. Under this method, the investment is recorded at the original cost at the balance sheet

Requirement 1

To determine:

The method of accounting that should be used for recording of the investment at balance sheet

To determine

Requirement 2

To prepare:

Journal entries to record (a) acquisition and (b) the sale of these shares

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

6 marks

Give me solution

Step by step solution

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 15, Problem 10QS

To determine

Concept Introduction:

Available for sale securities are recorded in the balance sheet using fair value method always.

Method of accounting $-$

Fair value method of accounting $-$ This method is used in case of the purchase when the share purchased are less than 20% of the voting rights and thus, the investor does not have significant control over the other company. Fair value adjustment method is used in order to adjust the purchase price of shares with the year-end fair market prices. It helps in providing a fair picture of the investment of shares that an investor holds.

Cost method $-$ This is used in when the investment is held for an indefinite period, i.e. the investor has an intention to hold the investment for a longer time. Under this method, the investment is recorded at the original cost at the balance sheet

Requirement 1

To determine:

The method of accounting that should be used for recording of the investment at balance sheet

To determine

Requirement 2

To prepare:

Journal entries to record (a) acquisition and (b) the sale of these shares

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 15, Problem 10QS

To determine

Concept Introduction:

Available for sale securities are recorded in the balance sheet using fair value method always.

Method of accounting $-$

Fair value method of accounting $-$ This method is used in case of the purchase when the share purchased are less than 20% of the voting rights and thus, the investor does not have significant control over the other company. Fair value adjustment method is used in order to adjust the purchase price of shares with the year-end fair market prices. It helps in providing a fair picture of the investment of shares that an investor holds.

Cost method $-$ This is used in when the investment is held for an indefinite period, i.e. the investor has an intention to hold the investment for a longer time. Under this method, the investment is recorded at the original cost at the balance sheet

Requirement 1

To determine:

The method of accounting that should be used for recording of the investment at balance sheet

To determine

Requirement 2

To prepare:

Journal entries to record (a) acquisition and (b) the sale of these shares

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 15, Problem 10QS

To determine

Concept Introduction:

Available for sale securities are recorded in the balance sheet using fair value method always.

Method of accounting $-$

Fair value method of accounting $-$ This method is used in case of the purchase when the share purchased are less than 20% of the voting rights and thus, the investor does not have significant control over the other company. Fair value adjustment method is used in order to adjust the purchase price of shares with the year-end fair market prices. It helps in providing a fair picture of the investment of shares that an investor holds.

Cost method $-$ This is used in when the investment is held for an indefinite period, i.e. the investor has an intention to hold the investment for a longer time. Under this method, the investment is recorded at the original cost at the balance sheet

Requirement 1

To determine:

The method of accounting that should be used for recording of the investment at balance sheet

To determine

Requirement 2

To prepare:

Journal entries to record (a) acquisition and (b) the sale of these shares

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 15, Problem 10QS

To determine

Concept Introduction:

Available for sale securities are recorded in the balance sheet using fair value method always.

Method of accounting $-$

Fair value method of accounting $-$ This method is used in case of the purchase when the share purchased are less than 20% of the voting rights and thus, the investor does not have significant control over the other company. Fair value adjustment method is used in order to adjust the purchase price of shares with the year-end fair market prices. It helps in providing a fair picture of the investment of shares that an investor holds.

Cost method $-$ This is used in when the investment is held for an indefinite period, i.e. the investor has an intention to hold the investment for a longer time. Under this method, the investment is recorded at the original cost at the balance sheet

Requirement 1

To determine:

The method of accounting that should be used for recording of the investment at balance sheet

To determine

Requirement 2

To prepare:

Journal entries to record (a) acquisition and (b) the sale of these shares

Answer 6

Chapter 15, Problem 10QS

To determine

Concept Introduction:

Available for sale securities are recorded in the balance sheet using fair value method always.

Method of accounting $-$

Fair value method of accounting $-$ This method is used in case of the purchase when the share purchased are less than 20% of the voting rights and thus, the investor does not have significant control over the other company. Fair value adjustment method is used in order to adjust the purchase price of shares with the year-end fair market prices. It helps in providing a fair picture of the investment of shares that an investor holds.

Cost method $-$ This is used in when the investment is held for an indefinite period, i.e. the investor has an intention to hold the investment for a longer time. Under this method, the investment is recorded at the original cost at the balance sheet

Requirement 1

To determine:

The method of accounting that should be used for recording of the investment at balance sheet

Answer 7

Chapter 15, Problem 10QS

To determine

Concept Introduction:

Available for sale securities are recorded in the balance sheet using fair value method always.

Method of accounting $-$

Fair value method of accounting $-$ This method is used in case of the purchase when the share purchased are less than 20% of the voting rights and thus, the investor does not have significant control over the other company. Fair value adjustment method is used in order to adjust the purchase price of shares with the year-end fair market prices. It helps in providing a fair picture of the investment of shares that an investor holds.

Cost method $-$ This is used in when the investment is held for an indefinite period, i.e. the investor has an intention to hold the investment for a longer time. Under this method, the investment is recorded at the original cost at the balance sheet

Requirement 1

To determine:

The method of accounting that should be used for recording of the investment at balance sheet

Answer 8

To determine

Requirement 2

To prepare:

Journal entries to record (a) acquisition and (b) the sale of these shares

Answer 9

To determine

Requirement 2

To prepare:

Journal entries to record (a) acquisition and (b) the sale of these shares

Answer 10

Expert Solution & Answer

Answer 11

Expert Solution & Answer

Answer 12

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 13

Ch. 15 - Prob. 1DQ Ch. 15 - Prob. 2DQ Ch. 15 - Prob. 3DQ Ch. 15 - Prob. 4DQ Ch. 15 - Prob. 5DQ Ch. 15 - Prob. 6DQ Ch. 15 - Prob. 7DQ Ch. 15 - Prob. 8DQ Ch. 15 - Prob. 9DQ Ch. 15 - Prob. 10DQ

Videos

Requirement 2

To prepare:

Journal entries to record (a) acquisition and (b) the sale of these shares

Want to see the full answer?

Chapter 15 Solutions

Videos

Requirement 2 To prepare: Journal entries to record (a) acquisition and (b) the sale of these shares

Want to see the full answer?

Chapter 15 Solutions

Requirement 2

To prepare:

Journal entries to record (a) acquisition and (b) the sale of these shares