Question
In: Accounting
ABC Corporation’s available for sale securities portfolio consisted of the following common stocks. &nb
- ABC Corporation’s available for sale securities portfolio consisted of the following common stocks.
Cost Fair Value
Paws Corporation $ 50,000 $ 50,000
Ace Inc. 68,000 58,000
Trevor Corporation 81,000 76,400
Instructions: Record any necessary journal entries assuming the fair value account had a credit balance of $5,000 prior to this entry.
Solutions
Expert Solution
| ABC Corporation : | |||
| Let us find the Fair Value adjustments required | |||
| Stock | Cost | Fair value | Adjsutment against cost |
| Paws Corporation | $ 50,000 | $ 50,000 | $ - |
| Ace Inc | $ 68,000 | $ 58,000 | $ (10,000) |
| Trevor Corporation | $ 81,000 | $ 76,400 | $ (4,600) |
| Total | $ (14,600) | ||
| So the required Fair value adjsutment against cost is = | $ (14,600.00) | ||
| Fair Value adjustment credit balance =$5000 | |||
| So the required Debut to Fair Value a/c is = | $ 19,600.00 |
| Adjsuting Journal entry | ||
| Account Title | Dr $ | Cr $ |
| Unrealized Gain/Loss -Other Comprehensive Income Account | 19,600 | |
| Available for Sale Securities | 19,600 |
ekkarill92 answered 1 year agoRelated Solutions
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