1.At December 31, 2015, a corporation had the following equity securities that w
ID: 2467813 • Letter: 1
Question
1.At December 31, 2015, a corporation had the following equity securities that were purchased during 2015, its first year of operation:
All market declines are considered temporary. Management intends to hold Security Y for a minimum of three years, but plans to sell Security Z during the first 6 months of 2016.
Using the T-account prepare separate entries for each security, in T-account format to:
1)Acquire each of the above listed securities during 2015.
2)Recognize the unrealized gain (loss) at 12/31/15
Loss Cost Fair Value Unrealized Gain Trading security A 85000 60000 (25000) B 15000 20000 5000 Total 100000 80000 (20000) Available-for-sale- security X 70000 80000 10000 Z 85000 55000 (30000) Total 155000 135000 (20000)Explanation / Answer
T -Account Investment in Trading Security -A Details Amt $ Details Amt $ To Investment in Trading Security -A 85,000 By Unrealized Loss on Holding of Trading Security-Income statement 25,000 Balance (Fair Value on Dec 31.) 60,000 T -Account Investment in Trading Security -B Details Amt $ Details Amt $ To Investment in Trading Security -B 15,000 To Unrealized Gain on Holding of Trading Security-Income statement 5,000 Balance (Fair Value on Dec 31.) 20,000 T -Account Investment in Available for Sale Security -X Details Amt $ Details Amt $ To Investment in Available for Sale Security -X 70,000 To Unrealized Gain on Holding of Trading Security-OCI 10,000 Balance (Fair Value on Dec 31.) 80,000 T -Account Investment in Available for Sale Security -Y Details Amt $ Details Amt $ To Investment in Available for Sale Security -X 85,000 By Unrealized Loss on Holding of Trading Security-OCI 30,000 Balance (Fair Value on Dec 31.) 55,000
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