Asked by Jackson Brown on Jun 16, 2024
Verified
At December 31 2017 the trading securities for Eddy Company are as follows: Security‾ Cost‾ Fair Value ‾ A $16,000$20,000 B 34,000‾32,000‾$50,000‾$52,000‾\begin{array}{lrr} \underline{\text { Security}}& \underline{\text { Cost}}& \underline{\text { Fair Value }}\\\text { A } & \$ 16,000 & \$ 20,000 \\\text { B } & \underline{34,000}& \underline{32,000}\\&\underline{\$50,000}&\underline{\$52,000}\end{array} Security A B Cost$16,00034,000$50,000 Fair Value $20,00032,000$52,000 Prepare the adjusting entry at December 31 2017 to report the securities at fair value.
Trading Securities
Financial instruments bought and held primarily for selling them in the near term to profit from short-term price movements.
Fair Value
An estimate of the market value of an asset or liability, based on the price at which willing parties would enter into a transaction.
Adjusting Entry
A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate periods.
- Assemble and refine ledger records for the purpose of reporting investments at fair value, following GAAP regulations.
- Understand how to account for unrealized gains and losses on available-for-sale securities.
Verified Answer
Unrealized Gain-Income \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad 2,000
Learning Objectives
- Assemble and refine ledger records for the purpose of reporting investments at fair value, following GAAP regulations.
- Understand how to account for unrealized gains and losses on available-for-sale securities.
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