Iron Company incurred the following transactions relating to the common stock of Bronze Company: July 14, 2010
Question:
Iron Company incurred the following transactions relating to the common stock of Bronze Company:
July 14, 2010 Purchased 10,000 shares at $35 per share.
Sept. 4, 2011 Sold 2,500 shares at $40 per share.
Aug. 24, 2012 Sold 1,500 shares at $33 per share.
The end-of-year market prices for the shares were as follows:
Dec. 31, 2010 $32 per share
Dec. 31, 2011 $45 per share
Dec. 31, 2012 $28 per share
Iron classifies the Bronze stock as trading securities.
Required:
1. Determine the amount of
(a) Realized gain or loss and
(b) Unrealized gain or loss to be reported on the income statement each year relating to the Bronze stock.
2. How would your answer to part (1) change if the securities were classified as available-for- sale? Explain.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Step by Step Answer:
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain