Question
Springer Inc. carries the following marketable equity securities on its books at December 31, 2013, and 2014. All securities were purchased during 2013 and there
Springer Inc. carries the following marketable equity securities on its books at December 31, 2013, and 2014. All securities were purchased during 2013 and there were no beginning balances in any market adjustment accounts.
Trading Securities:
| Cost | Market Dec. 31, 2013 | Market Dec. 31, 2014 | |
| V Company | $ 50,000 | $ 26,000 | $ 40,000 |
| W Company | $ 26,000 | $ 40,000 | $ 40,000 |
| X Company | $ 70,000 | $ 60,000 | $ 50,000 |
| Total | $ 146,000 | $ 126,000 | $ 130,000 |
Available-for-Sale Securities:
| Cost | Market Dec. 31, 2013 | Market Dec. 31, 2014 | |
| Y Company | $ 420,000 | $ 360,000 | $ 200,000 |
| Z Company | $ 100,000 | $ 120,000 | $ 240,000 |
| Total | $ 520,000 | $ 480,000 | $ 440,000 |
The cost method is used in accounting for all investments in securities.
(1) Give the entries necessary to record the valuations for both trading and available-for-sale securites at December 31, 2013 and 2014.
(2) What net effect would these valuations have on 2013 and 2014 net income?
Step by Step Solution
3.41 Rating (151 Votes )
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
Financial Reporting and Analysis
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
6th edition
9780077632182, 78025672, 77632184, 978-0078025679
