Weis Markets accumulates large amounts of excess cash throughout the year. It typically invests these funds in marketable securities until they are needed. The company’s most recent financial statements revealed a nearly $14 million unrealized gain on short-term investments.
Footnotes to the financial statements disclosed that Weis reports its short-term investments at fair value.
a. Explain the meaning of the company’s unrealized gain on short-term investments.
b. How does the unrealized gain impact the company’s financial statements?
c. Is the unrealized gain included in the computation of the company’s taxable income? Explain.
d. Evaluate fair value accounting from the perspective of the company’s creditors.

  • CreatedApril 17, 2014
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