Question
In 2011, a firm purchased a portfolio of marketable securities for $2,000, which it holds as current assets. At the end of 2011, the portfolio
In 2011, a firm purchased a portfolio of marketable securities for $2,000, which it holds as current assets. At the end of 2011, the portfolio had a market value of $1,600. During 2012, the firm sold some of the securities for $240 which had originally cost $200, but which had a market value of $180 at the end of 2011. At the end of 2012, the remaining securities had a market value of $2,300.
a. Assume the firm treats its holdings as available for sale.
1. Record the entry made at the end of 2011.
2. Record the entries made during 2012 and at the end of 2012.
b. Assume the firm treats its holdings as trading securities.
1. Record the entry made at the end of 2011.
2. Record the entries made during 2012 and at the end of 2012.
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