Equity investments accounted for by using the cost method are classified as either trading securitie

Equity investments accounted for by using the cost method are classified as either trading securitie

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Equity investments accounted for by using the cost method are classified as either trading securities  or available-for-sale securities, and the value of the investment is adjusted to market value. When an  equity investment accounted for under the cost method is sold, a gain or loss is recognized for the  difference between its acquisition cost and the proceeds received from the sale. Assume 36 of the  PWC Corporation shares purchased were sold for $30 per share and a fee of $25 was paid. The 
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Unformatted text preview: entry to record the sale would increase (debit) cash for the proceeds received of $1,055 (36 × $30 = $1,080 – $25 fee), decrease (credit) equity investments by $1,020.60 ($2,041 ÷ 72 = $28.35 × 36 shares) and record a gain on the sale for the $34.40 difference. General Journal Date Account Title and Description Ref. Debit Credit 20X0 May 27 Cash 1,055 Equity Investments 1,020.60 Gain on Sale of Equity Investments 34.40 Sale of 36 share of PWC Corporation...
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This note was uploaded on 11/15/2011 for the course ACCT 2310 taught by Professor Staff during the Spring '09 term at Texas State.

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