Presented below are four unrelated situations involving equity securities that have readily determinable fair values Situation 1 A noncurrent portfolio with an aggregate market value in excess of cost includes one particular security whose market value has declined to less than half of the original...

Situation 1 When a stock experiences a decline in value that is considered other than temporary its ...

Presented below are four unrelated situations involving equity securities that have readily determinable fair values. Situation 1

Question:

Presented below are four unrelated situations involving equity securities that have readily determinable fair values.

Situation 1

A noncurrent with an aggregate market value in excess of cost includes one particular security whose market value has declined to less than half of the original cost. The decline in value is considered to be other than temporary.

Situation 2

The of a company does not classify assets and liabilities as current and noncurrent. The of marketable equity securities includes securities normally considered to be trading securities that have a net cost in excess of market value of $ 2,000. The remainder of the is considered noncurrent and has a net market value in excess of $ 5,000.

Situation 3

A marketable equity security, whose market value is currently less than cost, is classified as a noncurrent security that is available for sale but is to be reclassified as a trading security.

Situation 4

A company’s noncurrent of marketable equity securities consists of the of one company. At the end of the prior year the market value of the security was 50 percent of original cost, and the effect was properly reflected in the However, at the end of the current year the market value of the security had appreciated to twice the original cost. The security is still considered noncurrent at year- end.

Required:

Determine the effect on classification, carrying value, and earnings for each of the preceding situations. Complete your response to each situation before proceeding to the next situation.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Portfolio
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