Question
Exercise 17-20 Presented below is information related to the purchases of common stock by Lilly Company during 2014. Cost (at purchase date) Fair Value (at
Presented below is information related to the purchases of common stock by Lilly Company during 2014.
Cost (at purchase date) | Fair Value (at December 31) | |
Investment in Arroyo Company stock | $100,000 | $80,000 |
Investment in Lee Corporation stock | 250,000 | 300,000 |
Investment in Woods Inc. stock | 180,000 | 190,000 |
Total | $530,000 | $570,000 |
In addition, assume that the investment in the Woods Inc. stock was sold during 2015 for $195,000. At December 31, 2015, the following information relates to its two remaining investments of common stock.
Cost (at purchase date) | Fair Value (at December 31) | |
Investment in Arroyo Company stock | $100,000 | $140,000 |
Investment in Lee Corporation stock | 250,000 | 310,000 |
Total | $350,000 | $450,000 |
Net income before any security gains and losses for 2015 was $905,000. The Arroyo Company stock is reported using the fair value option, The Lee Corporation investment is classified as available-for-sale and the Woods, Inc. investment is a trading security.
(a)Compute the amount of net income or net loss that Lilly should report for 2015, taking into consideration Lillys security transactions for 2015.
Net income or net loss that Lilly should report for 2015 | $ |
(b)Prepare the journal entry to record unrealized gain or loss related to the investment in Arroyo Company stock at December 31, 2015.(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date | Account Titles and Explanation | Debit | Credit |
Dec. 31, 2015 | |||
SHOW LIST OF ACCOUNTS |
LINK TO TEXT LINK TO TEXT |
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