Question
During 2013, Litten Company purchased trading securities as a short-term investment. The costs of the securities and their fair values on December 31, 2013, follow:
During 2013, Litten Company purchased trading securities as a short-term investment. The costs of the securities and their fair values on December 31, 2013, follow:
Security ......................................... Cost ....................... Fair Value, Dec. 31, 2013
A ..................................................... $65,000 ........................ $75,000
B ..................................................... 100,000 ........................ 54,000
C ..................................................... 220,000 ........................ 226,000
At the beginning of 2013, Litten had a zero balance in the market adjustment-trading securities account. Before any adjustments related to these trading securities, Litten had net income of $287,000.
1. What is net income after making any necessary trading security adjustments? (Ignore income taxes.)
2. What would net income be if the fair value of security B were $95,000?
Step by Step Solution
3.49 Rating (159 Votes )
There are 3 Steps involved in it
Step: 1
Complete ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Document Format ( 2 attachments)
635ddcdedd38f_179500.pdf
180 KBs PDF File
635ddcdedd38f_179500.docx
120 KBs Word File
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started