Question
1. Data regarding Rock Corp.s available-for-sale securities follows: Cost Market Value December 31, 20X7 $80,000 $65,000 December 31, 20X8 $80,000 $90,000 Differences between cost and
1. Data regarding Rock Corp.s available-for-sale securities follows:
|
| Cost | Market Value |
| December 31, 20X7 | $80,000 | $65,000 |
| December 31, 20X8 | $80,000 | $90,000 |
Differences between cost and market values are considered temporary. Rock does not elect the fair value option of accounting for available-for-sale securities. By what amount should Rock increase (credit) its 20X8 other comprehensive income?
$15,000
$0
$25,000
$10,000
2. Alton Co. began operations on January 1, 20X8. The following information pertains to Altons December 31, 20X8 portfolio of marketable equity securities:
|
| Trading securities | Available-for-sale securities |
| Aggregate cost | $360,000 | $550,000 |
| Aggregate market value | $320,000 | $450,000 |
| Aggregate lower of cost or market value applied to each security in the portfolio | $304,000 | $420,000 |
Alton uses the provisions of ASC 825 (SFAS 159) and elects the fair value option for all financial instruments. If the market declines are judged to be temporary, what amounts should Alton report as a loss on these securities in its December 31, 20X8 income statement?
Trading securities: $40,000; Available-for-sale securities: $0
Trading securities: $0; Available-for-sale securities: $100,000
Trading securities: $56,000; Available-for-sale securities: $130,000
Trading securities: $40,000; Available-for-sale securities: $100,000
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Database Audit And Protection
Authors: Gerardus Blokdyk
3rd Edition
0655407499, 978-0655407492
