Question
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)
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 |
(Assume a zero balance for any Fair Value Adjustment account.)
| (a) | What entry would Lilly make at December 31, 2014, to record the investment in Arroyo Company stock if it chooses to report this security using the fair value option? | |
| (b) | What entry would Lilly make at December 31, 2014, to record the investment in Lee Corporation, assuming that Lilly wants to classify this security as available-for-sale? This security is the only available-for-sale security that Lilly presently owns. | |
| (c) | What entry would Lilly make at December 31, 2014, to record the investment in Woods Inc., assuming that Lilly wants to classify this investment as a trading security? |
Step 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
Auditing Principles
Authors: Nformi Eugene Tawe
1st Edition
3330651032, 978-3330651036
