Final Exam 06

Final Exam 06 - Accounting for Marketable Securities:...

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Accounting for Marketable Securities : [063Fa] The Jackson Company was formed on January 1, Year 1 and has the following marketable securities portfolios. FMV means fair market value. The symbols are references to footnoted information for your use as appropriate. Additional Sale Cost FMV Investment Proceeds FMV At 12/31Yr. 1 At 12/31/Yr. 1 In Year 2 In Year 2 at 12/31/Yr. 2 Trading Securities: $3,430 $3,920 $980 $870■ $3,460 ■Original cost of $640. Available for Sale Securities (AFS): $4,880 $4,460 $2,340 $910♥ $6,160 ♥Original cost of $1,320. Turn the page for requirements Accounting for Marketable Securities (continued) : [063Fa] Based on the information given above, what items would appear in the income statement of Jackson Company for the year ended December 31, Year 2 ? Place your answers in the Answer Booklet. Designate any number you show as gain or (loss). Trading Securities: Realized gains/(losses) (if any): $_____________ Unrealized gains/(losses) (if any): $_____________ Available for Sale Securities:
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Realized gains/(losses) (if any): $_____________ Unrealized gains/(losses) (if any): $_____________ Based on the information given above, what items would appear in the owners’ equity section of the balance sheet of Jackson Company at December 31, Year 2 ? Place your answer in the Answer Booklet. Designate any number you show as gain or (loss). Available for Sale Securities: Unrealized Gain/(Loss) (if any) $______________ Exam continued on next page. Accounting for Investments: Equity Method: [063Fa] Ashley Company purchased 6,200 shares [31%] from the owners of David Company for $2,500,000 cash at the start of Year 1. Immediately after the purchase of these shares by Ashley Company, the companies have these owners’ equity account balances: Ashley David Company Company Contributed Capital $800,000 $2,100,000 Retained Earnings $3,200,000 $950,000 The David Company owns two assets for which the fair market values exceed the net book values: Building and Copyright. The excess of fair market values over the net book values are $420,000 for the Building and $380,000 for the Copyright. The building has a remaining useful life of seven years and the Copyright has a remaining useful life of three years. During Year 1, Ashley and David had net incomes of $920,000 and $540,000, respectively.
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During Year 1, Ashley and David declared and paid cash dividends of $90,000 and $130,000, respectively. Problem continued on next page.
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This note was uploaded on 01/16/2009 for the course ARTL 100G taught by Professor Demers during the Fall '08 term at USC.

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Final Exam 06 - Accounting for Marketable Securities:...

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