Balance sheet presentation of trading investments During 20Y8, its first year of operations, Galileo Company purchased two

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Balance sheet presentation of trading investments During 20Y8, its first year of operations, Galileo Company purchased two trading investments as follows:

Security Shares Purchased Cost Hawking Inc. 900 $44,000 Pavlov Co. 1,780 38,000 Assume that as of December 31, 20Y8, the Hawking Inc. stock had a market value of $50 per share, and the Pavlov Co. stock had a market value of $24 per share. Galileo Company had net income of $300,000 and paid no dividends for the year ended December 31, 20Y8. All of the trading investments are classified as current assets.

a. Prepare the “Current assets” section of the balance sheet presentation for the trading investments.

b. What impact would the change in fair value have on the “Stockholders’ Equity” section of the balance sheet?

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Corporate Financial Accounting

ISBN: 9781337398176

15th Edition

Authors: Carl Warren, Jefferson Jones

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