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SEE ATTACHMENT (Financial Statement Effect of Equity Securities) Presented below are three unrelated situations involving equity securities. CA17-3 (Financial Statement Effect of Equity Securities) Presented
SEE ATTACHMENT
(Financial Statement Effect of Equity Securities) Presented below are three unrelated situations involving equity securities.
CA17-3 (Financial Statement Effect of Equity Securities) Presented below are three unrelated situations involving equity securities. Situation 2: A noncurrent portfolio with an aggregate fair value in excess of cost includes one particular security whose fair value has declined to less than one-half of the original cost. The decline in value is considered to be other than temporary. Instructions What is the effect upon carrying value and earnings for each of the situations above? CA17-4 (Investment Accounted for under the Equity Method) On July 1, 2015, Fontaine Company purchased for cash 40% of the outstanding capital stock of Knoblett Company. Both Fontaine Company and Knoblett Company have a December 31 year-end. Knoblett Company, whose common stock is actively traded in the over-the-counter market, reported its total net income for the year to Fontaine Company and also paid cash dividends on November 15, 2015, to Fontaine Company and its other stockholders. Instructions How should Fontaine Company report the above facts in its December 31, 2015, balance sheet and its income statement for the year then ended? Discuss the rationale for yourStep by Step Solution
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