On November 11, 2014, Wadsworth Company purchased twenty shares of ZZZ for $8 per share. Wadsworth held the investment for the remainder of 2014, and as of December 31, the per-share market value of ZZZ had risen to $10. During 2015, Wadsworth sold ten shares of ZZZ for $9 each, and at the end of 2015, the per-share market price of the remaining ten shares was $12. During 2016, the remaining shares of ZZZ were sold for $14 each. Assume that Wadsworth held no other equity investments during this time period.

a. Complete the following chart. The first column assumes that the investment was classified as trading securities; the second column assumes that the investment was classified as available-for-sale securities.

b. Comment on the differences.

Transcribed Image Text:

Trading Avallable-for-Sale 2014 income 12/31/14 balance sheet investment value 2015 income 12/31/15 balance sheet investment value 2016 income Total income (14 15 + 16)