Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I cannot seem to figure out question #4. The answer is D. $7,000, but I am not getting that amount. Please provide an explanation. I've
I cannot seem to figure out question #4. The answer is D. $7,000, but I am not getting that amount. Please provide an explanation. I've included the other question relating to AFS securities as well. Below is my work.
Invest AFS | 100,000 | ||
Cash | 100,000 | ||
loss - OCI | 1,000 | ||
Invest AFS | 1,000 | ||
*to record change in value | |||
Cash | 29,000 | ||
reclass loss - income | 1,000 | ||
loss - OCI | 1,000 | ||
Invest AFS | 25,000 | ||
Gain - income | 4,000 | ||
Invest - AFS | 6,000 | ||
Gain - OCI | 6,000 |
My teacher said the answer to #4 was $7,000 and I can't see why. This is her reasoning and I don't know how to interpret it.
Beginning 100,000 - 25,000 (sold)
OCI Gain 6,000
Reclass 1,000
Net gain = 7,000
There is no reclassification of a gain...it is a loss that was reclassed as an income stmt loss...
Use the following information to answer questions 1-4: On January 1,2019, a company's balance sheet reports its investments in debt securities as follows Assets Investment in trading securities... .$160,000 100,b00 Equity Accumulated other comprehensive income: Unrealized gains (losses) on AFS securities... S 4,000 Additional information: The HTM securities are S200,000 face value secunties purchased on January i, 2017, at a yield of 4%, The securities have a 4-year total life and pay interest annually on December 31, at a coupon rate of 6%. a. b. The trading securities on hand on January I were sold in 2019 for $180,000. c. More trading securities were purchased for $100,000. They are still on hand at December 31,2019, and d. AFS securities, originally purchased for $26,000 with a carrying value of $25,000 as of January 1,2019, e. AFS securities on hand at December 31,2019, have a fair value of $81,000. have a fair value of $125,000. were sold for $29,000Step by Step Solution
There are 3 Steps involved in it
Step: 1
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
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started