3110 - Investment Handout solutions

3110 - Investment Handout solutions - EQUITY METHOD 1/3...

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Investment Handout solutions: Problem 1: DATE TRADING SECURITIES SECURITIES AVAILABLE FOR SALE DEBT HELD TO MATURITY 1/3 trading securities 87,538 securities available 87,538 debt held to mat. 87,538 Cash 87,538 cash 87,538 cash 87,538 6/30 cash 4,000 cash 4,000 cash 4,000 Trading sec. 377 securities avail. 377 debt held to mat. 377 Interest revenue 4,377 Int. revenue 4,377 int. revenue 4,377 12/31 cash 4,000 cash 4,000 cash 4,000 Trading sec. 396 sec. available 396 debt held to mat. 396 Interest revenue 4,396 interest revenue 4,396 interest revenue 4,396 12/31 Adj – trading sec 11,189 Adj. – sec. available 11,189 Unrealized gain – I/S 11,189 Unrealized gain – S/E 11,189 1/5 Cash 100,000 Cash 100,000 Cash 100,000 Trading Sec. 88,311 Unrealized gain 11,189 Debt held to mat. 88,311 Adj. – trad. Sec. 11,189 Sec. Available 88,311 Gain on Sale 11,689 Gain on Sale 500 Adj. – Sec. Avail 11,189 Gain on Sale 11,189 Problem 2: DATE TRADING SECURITIES SECURITIES AVAILABLE FOR SALE
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Unformatted text preview: EQUITY METHOD 1/3 trading securities 200,000 securities available 200,000 inv in XYZ stock 200,000 Cash 200,000 cash 200,000 cash 200,000 12/31 cash 4,000 cash 4,000 cash 4,000 Dividend revenue 4,000 dividend revenue 4,000 Inv. In XYZ stock 4,000 12/31 inv in xyz stock 16,000 Inv revenue 16,000 Inv revenue 3,000 Inv in stock 3,000 12/31 Adj. Trading secu 20,000 Adj. Secu Avail 20,000 Unreal gain I/S 20,000 Unrealized gain S/E 20,000 Problem 3: Change the purchase price to 36 per share first!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1/1 144,000 cost 16,000 income (10,000) dividends (3,200) amortization of excess (80,000 * .40 * 1/10) Total 146,800 Problem 4: Balance Sheet Long-Term Investments: Securities Available 52,500 Adj. Sec Avail. ( 1,500) Fair value 51,000 Equity: Un. Loss Sec. Avail. 1,500 Income Statement: Gain on Sale of investments (8,000 7,500) 500...
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3110 - Investment Handout solutions - EQUITY METHOD 1/3...

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