The investments of Harlon Enterprises included the following cost and fair value amounts ($ in millions):

Harlon accounts for its equity investment portfolio at fair value through net income. Harlon sold its holdings of A Corporation shares on June 1, 2019, for $25 million. On September 12, it purchased the C Corporation shares.

Required:

1. What is the effect of the sale of the A Corporation shares and the purchase of the C Corporation shares on Harlon's 2019 pretax earnings?

2. At what amount should Harlon's securities equity investment portfolio be reported in its 2019 balance sheet?

Transcribed Image Text:

Fair Value, Dec. 31 Equity Investments Cost 2018 2019 A Corporation shares $ 20 $14 35 na $ 37 B Corporation bonds C Corporation shares D Industries shares 35 15 na 14 45 46 50 Totals $115 $95 $101 Fair Value, Dec. 31 Equity Investments Cost 2018 2019 A Corporation shares $ 20 $14 35 na $ 37 B Corporation bonds C Corporation shares D Industries shares 35 15 na 14 45 46 50 Totals $115 $95 $101

Answer rating: 100% (QA)

1 In 2018 A corporation shares would be reduced 20 million 14 million 6 mill... View the full answer