The investments of Harlon Enterprises included the following cost and fair value

Question

The investments of Harlon Enterprises included the following cost and fair value amounts ($ in millions) Fair Value, Dec. 31 Equity Investments A Corporation shares B Corporation shares C Corporation shares D Industries shares Cost $ 38 53 24 54 $169 2018 $ 23 53 na 2019 na $ 55 23 59 $137 Totals $131 Harlon accounts for its equity investment portfolio at fair value through net income. Harlon sold its holdings of A Corporation shares on June 1, 2019, for $24 million. On September 12, it purchased the C Corporation shares. Required 1. What is the effect of the sale of the A Corporation shares and the purchase of the C Corporation shares on Harlon's 2019 pretax earnings? 2. At what amount should Harlon's securities equity investment portfolio be reported in its 2019 balance sheet? (For all requirements, enter your answers in millions, (i.e., 10,000,000 should be entered as 10).) million 2. Amount million

Explanation / Answer

Part 1

Trading securities

2018 – A Corporation shares would be reduced by $15 million ($23- $38)

Unrealized holding loss...... 15

Fair value adjustment...... 15

2019 – A Corporation shares would need a fair value adjustment of $14 million as a credit ($24- $38).

Fair Value Adjustment...... ...1

Unrealized holding gain.............. 1 (15-14)

Part 2

They would be reported at their fair value of $137 million

1. unrealized holding gain 1 million 2. amount 137 million

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.