Libby Solutions Ch 12

Libby Solutions Ch 12 - E123. June 30, 2011: Investments in...

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E12–3. June 30, 2011: Investments in SAS (+A) (9,000 shares x $20). ..................... 180,000 Cash (–A). ........................................................................... 180,000 Dec. 31, 2011: Investments in SAS (+A). ....................................................... 36,000 Net unrealized losses/gains (+OCI, +SE). .......................... 36,000 Dec. 31, 2012: Investments in SAS (+A). ....................................................... 45,000 Net unrealized losses/gains (+OCI, +SE). .......................... 45,000 Dec. 31, 2013: Net unrealized losses/gains (–OCI, –SE). .............................. 27,000 Investments in SAS (–A). .................................................... 27,000 Computations: Year Fair Value - Book Value before Adjustment = Amount for Adjusting Entry 2011 $216,000 - $180,000 = +$36,000 2012 261,000 - 216,000 = + 45,000 2013 234,000 - 261,000 = - 27,000 Balance in Net Unrealized Losses/Gains +$54,000 Feb. 14, 2014: Cash (+A) (9,000 shares x $23). ............................................ 207,000 Net unrealized losses/gains (–OCI, –SE). .............................. 54,000 Investments in SAS (–A). .................................................... 234,000 Gain on sale of investment (+Gain, +SE). .......................... 27,000 Note: The net unrealized losses/gains account is a balance sheet account. It does not affect the computation of net income each year. Because it is a balance sheet account, it maintains its balance from year to year. Therefore, the decline in stock price that occurs in 2013 is reported as an adjustment to the net unrealized losses/gains account. When the stock is sold in 2014, the net
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Libby Solutions Ch 12 - E123. June 30, 2011: Investments in...

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