Keys, Inc., compared the cost of its marketable securities to their market value at the end of 2010. This comparison follows:
Management would like to classify these securities as available- for- sale and, therefore, report the unrealized loss on the statement of shareholders’ equity rather than the income statement. How should the auditor decide if the securities are “trading” or “available- for- sale”? What are the advantages and disadvantages of reporting unrealized losses on the statement of shareholders’ equity rather than the in-come statement? How will the various stakeholders be affected by this decision?
Answer to relevant QuestionsThe following list of accounts was taken from the 2010 annual report of Madlinger Corporation: Accounts Payable ............ $ 4,669,902 Accounts Receivable ............ 664,065 Accrued Liabilities ............ ...Rent expense as shown on the income statement is $ 120,000, while cash paid for rent is shown on the statement of cash flows at $ 135,000. Did prepaid rent increase or decrease during the period? By what amount? A variety of transactions follows. Identify each transaction as an operating (O), investing (I), financing (F), or other noncash (NC) event. Put the correct letter( s) in the space provided. ________ A. Borrowed $ 50,000 on ...Shoemaker Company purchased a machine on January 1, 2009, for $ 85,000 in cash. On June 30, 2010, Shoemaker sold the machine at a loss of $ 5,000. Accumulated depreciation as of June 30, 2010, was $ 21,250. What is the cash ...Who are the major user groups of financial statements, and how do their perspectives on the analysis of financial statements differ?
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