Brief Exercise 12-3 Available-for-sale securities [LO12-3] S&L Financial buys an

Question

Brief Exercise 12-3 Available-for-sale securities [LO12-3]

S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2013, S&L purchased Coca-Cola common shares for $730,000 and sold the shares on January 3, 2014, for $733,000. At December 31, the shares had a fair value of $728,000, and S&L has the intent and ability to hold the investment until fair value recovers.

What pretax amounts did S&L include in its 2013 and 2014 earnings as a result of this investment?

2013...... (Gain, Loss, or No gain/loss in earnings) what is the pretax amount?

2014......(Gain, Loss, or No gain/loss in earnings) What is the pretax amount?

Show work

S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2013, S&L purchased Coca-Cola common shares for $730,000 and sold the shares on January 3, 2014, for $733,000. At December 31, the shares had a fair value of $728,000, and S&L has the intent and ability to hold the investment until fair value recovers.

Explanation / Answer

2013......FAIR VALUE AS ON DECEMBER 31=$7,28,000

LESS:PURCHASE PRICE =$7,30,000

  LOSS IN EARNINGS =$2,000

2014......FAIR VALUE AS ON DECEMBER 31=$7,28,000

LESS:SALES PRICE =$7,33,000

GAIN IN EARNINGS =$5,000

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

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