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Concept Introduction:
Available-for-sale investments:
Available-for-sale investments are the investments which neither fall in the category of trading investments nor fall in the category of held-to-maturity investments.
They are recorded at fair market value. The effects of fluctuations in the prices i.e. increase or decrease in prices at the year-end are adjusted and unrealized gain or loss due to these fluctuations are transferred to other comprehensive income.
Other comprehensive income is not included in net income. Other comprehensive income are shown after net income in the income statement.
Requirement 1
To prepare:
Journal entries to record the preceding transactions and events.
Requirement 2
To prepare:
A table to compare year-end cost and fair values of Rose’s short-term investments in available for sale securities.
Requirement 3
To prepare:
An
Requirement 4
To explain:
Requirement 5
To determine:
How short-term investments affects Rose’ (a) income statement for the year 2017 and (b) the equity section of its balance sheet at year-end 2017.
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Chapter 15 Solutions
Connect Access Card for Fundamental Accounting Principles
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