Question
MS buys and sells securities expecting to earn profits on short-term differences in price. The following selected transactions relate to MS's investments in trading securities
MS buys and sells securities expecting to earn profits on short-term differences in price. The following selected transactions relate to MS's investments in trading securities during 2021-2022. The company's fiscal year ends on December 31. No trading securities were held by MS on Jan 1, 2021.
2021
May 1) Purchased 10,000 shares of Apple stocks for $120 per share
Jun 1) Purchased 10,000 shares of Apple stocks for $145 per share
Jul 1) Sold 15,000 shares of Apple stocks for $140 per share.
Sep 1) Purchased 2,000 shares of Apple stocks for $130 per share
Nov 1)Received dividend $50,000
Dec 31) Market price for Apple is $150 per share
2022
Apr 1) Purchased 3,000 Apple stocks for $160 per share
May 1) Sold 2,000 Apple stocks for $150 per share
July 1) Purchased 8,000 Apple stocks for $180 per share
Aug 1) Sold 6,000 shares of Apple stocks for $190 per share
Dec 31) Market price for Apple is $220 per share
Now assume that MS uses the last in first out (LIFO) cost basis assumption. What is the balances of "fair value adjustment" account on Dec 31, 2021?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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