UCLA FIN 432 Ch 5 HW Solutions

UCLA FIN 432 Ch 5 HW Solutions - UCLA Extension Chapter 5...

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Unformatted text preview: UCLA Extension Chapter 5 HW Solutions Problem 5-1 a. Investments Reported on the Balance Sheet: Able Corp. bonds ............................ $ 330 Bryan Co. bonds .......................825 Caltran, Inc. bonds ...................515 Available-for-sale equity securities 1,600 Trading equity securities .... 950 Total.......................................$4,220 b. Reporting of Unrealized Value Fluctuations: Unrealized price fluctuations on available-for-sale securities are reported in comprehensive income (Bryan Co. bonds and available-for-sale equity securities). Unrealized price fluctuations on trading securities are reported in net income (Caltran bonds and trading equity securities). Problem 5-5 a. For Year 6: No effect on sales. Net income effect equals the dividend income of $10 (1% of $1,000, or $1 per share) since the investment is accounted for under the market method. Also, assuming the shares are classified as available-for-sale (a reasonable assumption given subsequent purchases), the price appreciation of $1 per share will bypass the income statement....
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This note was uploaded on 02/28/2012 for the course BUSINESS 101 taught by Professor Smith during the Spring '08 term at UCLA.

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UCLA FIN 432 Ch 5 HW Solutions - UCLA Extension Chapter 5...

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