At December 31, 2014 , Charter Holding Co. owned the following investments in ca

Question

At December 31, 2014, Charter Holding Co. owned the following investments in capital stock of publicly traded companies (classified as available-for-sale securities):

Sold 1,000 shares of its investment in Limited Brands, Inc., at a price of $45 per share, less a brokerage commission of $100.

Sold 2,000 shares of its investment in The Gap, Inc., at a price of $35 per share, less a brokerage commission of $150.

At December 31, 2015, the market values of these stocks were: Limited Brands, Inc., $42 per share; and The Gap, Inc., $37 per share.

Calculate the amount of marketable securities in the balance sheet at December 31, 2014.

Calculate the amount of unrealized holding gain (or loss) in the balance sheet at December 31, 2014.

At December 31, 2014, Charter Holding Co. owned the following investments in capital stock of publicly traded companies (classified as available-for-sale securities):

Explanation / Answer

a-1       Amount of marketable securities in the balance sheet at December 31, 2014

Limited Brands, Inc. The Grap, Inc

   5000 shares 4000 shares

Less : share sold (1000 shares) (2000 shares)

Remaining share at Balance Sheet 4000 shares * $44 2000 shares * $36

   =$176000 =$72000

Total amount of marketable securities =$176000 + $72000

   = $248000

a-2    Amount of unrealized holding gain (or loss) in the balance sheet at December 31, 2014

unrealised gain in The limited , Inc. = fair value - cost

= $45000 - $40000

= $ 5000

Unrealised Loss in The Grap ,Inc. = $70000 - $ 80000

= ($10000)

Notes: cost of 1000 shares sold in The limited, Inc.

   = $200000 / 5000shares * 1000 shares

=$40000

cost of 2000 shares sold in The Grap, Inc

= $160000 / 4000shares * 2000 shares

= $80000

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