Among the various responsibilities of the Chief Financial Officer (CFO) of the Amphlett Corporation was the management
Question:
Among the various responsibilities of the Chief Financial Officer (CFO) of the Amphlett Corporation was the management and oversight of the firm’s cash reserves. During the year, the CFO had invested some of the firm’s excess cash in what she thought were three undervalued stocks. All of the securities were classified as available-for-sale. At year-end, she reviewed how the portfolio of investments had done.
| | Cost | Market Value |
| Bristol-Myers Squibb, Inc. | $50,000 | $42,000 |
| Titanium Metals, Corp | 50,000 | 55,000 |
| Zila, Inc. | 50,000 | 80,000 |
| | $150,000 | $177,000 |
Required
1. Calculate the value that would be assigned to the portfolio of marketable equity securities on the balance sheet of The Amphlett Corporation at year-end under each of the following approaches:
| a. | Cost | $Answer |
| b. | Lower-of-cost-or-market | |
| | Individual-security basis | $Answer |
| | Portfolio basis | $Answer |
| c. | Market value | $Answer |
Expert Answer:
a Cost basis It means the invenstment is recorded in balance sheet based on the cost at wh... View the full answer
