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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Refer to the information for Shackley above. Assume that one of the securities was solely responsible for the $600 unrealized loss and was responsible for $150 of the interest income. If Shackley bought that security for $3,500, what is the value of the security on the yearend balance sheet?

  1. $2,900
  2. $3,050
  3. $3,500
  4. $3,650

To determine

Introduction:

The debt security is a security that is issued when a company owes a blend of interest amount and principal amount to another company.

To choose:

The option that states the value of security at year end.

Explanation
Situation Result Calculation
Acquisition Cost > Fair Market Value Unrealized Loss Acquisition Cost - Fair Market Value
Acquisition Cost < Fair Market Value Unrealized Gain Fair Market Value - Acquisition Cost

Acquisition Cost of Security...

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