Question
Historical Cost vs. Fair Value Instruction : a] Please prepare the Year 1 and Year 2 (closing) income statement and balance sheet b] Please show
Historical Cost vs. Fair Value
Instruction : a] Please prepare the Year 1 and Year 2 (closing) income statement and balance sheet b] Please show your calculation to support each amount
Information :
A company raising $300,000 in cash; $150,000 from issuing equity and $150,000 from issuing long term debt with 8% discount rate. Company uses $300,000 rising to invest to a commercial property. It rents out for $25,000 per year. At the end of Year 1, the company is still holding the commercial property, which is valued at 375,000. Also, the market value of the long-term security has raise to $160,000.
Now, assume that during Year 2, the company earns rental income of $30,000, the commercial property is valued at $350,000 at year ended, and the market value of the long-term investment has decreased to $120,000.
Assume the commercial property
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