Zippydah Company has the following data at December 31, 2012. Securities Cost Fa
ID: 2351284 • Letter: Z
Question
Zippydah Company has the following data at December 31, 2012.Securities Cost Fair Value
Trading $120,000 $124,000
Available-for-sale 100,000 94,000
The available-for-sale securities are held as a long-term investment.
Prepare the adjusting entries to report 1. Trading securities at fair value and 2. Available-for-sale securities at fair value.
(1)
(2)
Indicate the statement presentation of each class of securities.
Zippydah Company
Balance Sheet
December 31,2012
Indicate the related unrealized gain (loss) accounts.
Zippydah Company
Income Statement (Detailed)
For the year ended December 31, 2012
Explanation / Answer
(a) Prepare adjusting entry “to record trading securities” and “to record available-for-sale securities.” Dr Securities Fair Value Adjustment (Trading) 4,000 Cr Unrealized Holding Gain or Loss--Income 4,000 Dr Unrealized Holding Gain or Loss--Equity 6,000 Cr Securities Fair Value Adjustment (Available-for-Sale) 6,000 (b) Indicate the statement presentation of each class of securities and the related unrealized gain (loss) accounts. For the trading securities, the unrealized gain would be shown as part of net income on the income statement. For available-for-sale securities, the unrealized loss would be shown as part of other comprehensive income (in stockholders' equity) until sold (realized).
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.