Question
Reed Insurance Co. began operations on January 1, year 1. The following information pertains to Reed's December 31, year 1 portfolio of marketable equity securities:
- Reed Insurance Co. began operations on January 1, year 1. The following information pertains to Reed's December 31, year 1 portfolio of marketable equity securities:
|
| Trading securities | Available-for-sale securities |
| Aggregate cost | $360,000 | $550,000 |
| Aggregate fair value | 320,000 | 450,000 |
| Aggregate lower of cost or market value applied to each security in the portfolio | 304,000 | 420,000 |
Reed does not elect the fair value option. If the fair value declines are judged to be temporary, what amounts should Reed report as a loss on these securities in its December 31, year 1 income statement?
|
| Trading securities | Available-for-sale securities |
| a. | $40,000 | $0 |
| b. | $0 | $100,000 |
| c. | $40,000 | $100,000 |
| d. | $56,000 | $130,000 |
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Introduction To Accounting An Integrated Approach
Authors: Penne Ainsworth, Dan Deines
5th Edition
0073527009, 9780073527000
