Question

On October 18, 2014, Daley Inc. purchased 100 shares of Orthon at $32 per share. The investment was classified as available-for-sale securities. The shares were held throughout the remainder of 2014 and 2015, and by December 31, 2014 and 2015 the per-share market price had risen to $40 and $50, respectively. On December 31, 2015, Daley decided to change the classification from available-for-sale to trading securities.

REQUIRED:
a. Provide the journal entries recorded at October 18, 2014; December 31, 2014; and December 31, 2015.
b. Assume that the investment was originally classified as trading securities and then changed to available-for-sale on December 31, 2015. Provide the journal entries recorded at October 18, 2014; December 31, 2014; and December 31, 2015.
c. Compute the 2014 and 2015 income effects under the two assumptions.



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  • CreatedAugust 19, 2014
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