
Concept Introduction:
Available for sale securities are recorded in the
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
Requirement 2
To prepare:

Want to see the full answer?
Check out a sample textbook solution
Chapter 15 Solutions
Fundamental Accounting Principles
- Hi expert please give me answer general accounting questionarrow_forwardXYZ Technologies, Inc., purchased advanced robotics equipment three years ago for $20 million. The machinery can be sold in the current market for $18.5 million. XYZ's current balance sheet shows net fixed assets of $16 million, current liabilities of $750,000, and net working capital of $300,000. If all current assets were liquidated today, the company would receive $1.25 million in cash. a. What is the book value of XYZ's total assets today? b. What is the market value of XYZ's total assets today?arrow_forwardProvide Accurate Answerarrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





