QUESTION 45 The Investment portfolio of XYZ Ltd. as on 31.03.2020 consisted of the following: (Rs. in lacs) Current Investments Cost Fair Value as on 31.03.2020 (1) 1000 Equity Shares of A Ltd. 7 (2) 500 Equity Shares of B Ltd. 10 15 (3) 1000 Equity Shares of C Ltd. 15 12 Total 30 34 Give your comments on the following: (i) The company wants to value the above portfolio at Rs. 30 lakhs being lower of cost or fair market value. (ii) Company wants to transfer 1000 Equity Shares of C Ltd. from current investments to long term investments on 31.03.2020 at cost of Rs. 15 lakhs.

QUESTION 45 The Investment portfolio of XYZ Ltd. as on 31.03.2020 consisted of the following: (Rs. in lacs) Current Investments Cost Fair Value as on 31.03.2020 (1) 1000 Equity Shares of A Ltd. 7 (2) 500 Equity Shares of B Ltd. 10 15 (3) 1000 Equity Shares of C Ltd. 15 12 Total 30 34 Give your comments on the following: (i) The company wants to value the above portfolio at Rs. 30 lakhs being lower of cost or fair market value. (ii) Company wants to transfer 1000 Equity Shares of C Ltd. from current investments to long term investments on 31.03.2020 at cost of Rs. 15 lakhs.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 18E: Trading Securities Pear Investments began operations in 2020 and invests in securities classified as...

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Trading Securities Pear Investments began operations in 2020 and invests in securities classified as trading securities. During 2020, it entered into the following trading security transactions: Purchased 20,000 shares of ABC common stock at $38 per share Purchased 32,000 shares of XYZ common stock at $17 per share At December 31, 2020, ABC common stock was trading at $39.50 per share and XYZ common stock was trading at $16.50 per share. Required: 1. Prepare the necessary adjusting entry to value the trading securities at fair market value. 2. CONCEPTUAL CONNECTION What is the income statement effect of this adjusting entry?
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