POA11e App A - APPENDIX A SOLUTIONS ACCOUNTING FOR...

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App A P1 APPENDIX A - SOLUTIONS ACCOUNTING FOR INVESTMENTS Appendix A, P 1. Jan. 6 Short-Term Investments 210,000 Cash 210,000 Purchase of Quaker Oats shares as trading securities 7,000 × $30 = $210,000 Feb. 15 Short-Term Investments 198,000 Cash 198,000 trading securities 9,000 × $22 = $198,000 June 30 Allowance to Adjust Short-Term Investments to Market 34,000 Unrealized Gain on Investments 34,000 Recognition of unrealized gain on trading portfolio Market Gain/ Security Cost Value (Loss) Quaker Oats ( 7,000 shares) $210,000 $280,000 $70,000 EG&G ( 9,000 shares) 198,000 162,000 Totals $408,000 $442,000 $34,000 Aug. 20 Cash 144,000 Realized Loss on Sale of Investments 54,000 Short-Term Investments 198,000 Sale of 9,000 shares of EG&G at less than cost This entry is not affected by the adjusting entry on June 30.
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App A P2 Appendix A, P 2. 1. c, consolidation of parent and subsidiary financial statements Reason: More than 50 percent of voting stock 2. a, cost-adjusted-to-market method Reason: Less than 20 percent of voting stock 3. a, cost-adjusted-to-market method Reason: Nonvoting stock 4. c, consolidation of parent and subsidiary financial statements Reason: More than 50 percent of voting stock 5. b, equity method Reason: Between 20 percent and 50 percent of voting stock 6. c, consolidation of parent and subsidiary financial statements Reason: More than 50 percent of voting stock
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App A P3 Appendix A, P 3. 1. T accounts set up and transactions recorded in the accounts. Beg. Bal. 40,000 Beg. Bal. 40,000 Dec. 31 20,000 Dec. 31 20,000 End. Bal. 60,000 End. Bal. 60,000 Cost of portfolio of long-term investments $485,000 Year-end market value of long-term investments 425,000 Unrealized loss $ 60,000 Current balance of Unrealized Loss account 40,000 Adjustment $ 20,000 Unrealized Loss on Long-Term Investments Allowance to Adjust Long-Term Investments to Market * + * +
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App A P4 Appendix A, P 4. The investment in Taglia Corporation should be accounted for using the cost-
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This note was uploaded on 11/02/2011 for the course ACCT 210 taught by Professor Mcgonigal during the Spring '11 term at E. Washington.

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POA11e App A - APPENDIX A SOLUTIONS ACCOUNTING FOR...

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