HORNGREN'S FINANCIAL & MANGERIAL ACCOUNT
7th Edition
ISBN: 9780136505273
Author: MILLER-NOBLES
Publisher: PEARSON
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Chapter 10, Problem 9QC
To determine
Available-for-sale investments:
Available-for-sale investments are the investments in debt or equity securities, where the investor wishes to holds less than 20% of voting stock, and neither referred as trading or hold-to-maturity investments. For debt securities, the investor do not wish to hold it till maturity, and hence reported either as current assets or as long-term assets in the balance sheet depending upon the holding period of the security.
Unrealized-gain or Unrealized-loss:
Unrealized-holding gain or loss occurs when the investor company record the investments at its fair value, in its financial statements, without disposing (selling) them. When the cost of the investment is lesser than the fair value of the investment, then it is unrealized-gain. On the contrary, when the cost of the investment is greater than the fair value of the investment, then it is unrealized-loss.
The value of per share difference of $1 would be reported on the year-end financial statements.
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Colvis Corporation purchased an available-for-sale investment in 1,100 shares of Home Central shares for $30 per share. On the next balance-sheet date, Home Central shares are quoted at $34 per share As
tax rate of 20%. Colvis' should report
O A. unrealized gain of $4,400 in other comprehensive income.
OB. realized gain of $4,400 in other comprehensive income.
OC. unrealized loss of $4,400 in the income statement
O D. unrealized gain of $3,520 in other comprehensive income.
Click to select your answer.
Bendi Corp. purchased 1,000 shares of Kala Corp. for $16 per share. The investment represents 5% ownership, and Bendi does not have significant influence. The fair value at year-end is $15 per share. Assuming no other transactions occurred, where would the $1 per share difference be reported on the year-end financial statements?
a. Other Income and (Expense)
b. Other Comprehensive Income
c. Operating Income
d. None of the above
Colvis Corporation purchased an available-for-sale investment in 1,100 shares of Home Central shares for S30 per share. On the next balance-sheet date, Home Central shares are quoted at $34 per share. Assume
tax rate of 20%. Colvis' should report
O A. unrealized gain of $4,400 in other comprehensive income.
O B. realized gain of $4,400 in other comprehensive income.
O C. unrealized loss of $4,400 in the income statement.
O D. unrealized gain of $3,520 in other comprehensive income.
Chapter 10 Solutions
HORNGREN'S FINANCIAL & MANGERIAL ACCOUNT
Ch. 10 - Prob. 1QCCh. 10 - Which of the following investments is most likely...Ch. 10 - If Intervale Railway invests 100,000 in 5% bonds...Ch. 10 - Prob. 4QCCh. 10 - Prob. 5QCCh. 10 - Prob. 6QCCh. 10 - Prob. 7QCCh. 10 - Harvard Co. purchased a trading investment on...Ch. 10 - Prob. 9QCCh. 10 - Prob. 10QC
Ch. 10 - What is a debt security?Ch. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Briefly describe the five specific types of debt...Ch. 10 - How is the purchase of a held-to-maturity debt...Ch. 10 - Prob. 6RQCh. 10 - What method is used for investments in equity...Ch. 10 - What method is used for investments in equity...Ch. 10 - What adjustment must be made at the end of the...Ch. 10 - Where on the financial statements is an unrealized...Ch. 10 - Prob. 11RQCh. 10 - Prob. 12RQCh. 10 - Prob. 13RQCh. 10 - What does the rate of return on total assets...Ch. 10 - Identifying why companies invest and classifying...
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