Springer Inc. carries the following marketable equity securities on its books at December 31, 2013, and 2014.
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Question:
Springer Inc. carries the following marketable equity securities on its books at December 31, 2013, and 2014. All securities were purchased during 2013 and there were no beginning balances in any market adjustment accounts.
Trading Securities:
Cost | Market Dec. 31, 2013 | Market Dec. 31, 2014 | |
V Company | $ 50,000 | $ 26,000 | $ 40,000 |
W Company | $ 26,000 | $ 40,000 | $ 40,000 |
X Company | $ 70,000 | $ 60,000 | $ 50,000 |
Total | $ 146,000 | $ 126,000 | $ 130,000 |
Available-for-Sale Securities:
Cost | Market Dec. 31, 2013 | Market Dec. 31, 2014 | |
Y Company | $ 420,000 | $ 360,000 | $ 200,000 |
Z Company | $ 100,000 | $ 120,000 | $ 240,000 |
Total | $ 520,000 | $ 480,000 | $ 440,000 |
The cost method is used in accounting for all investments in securities.
(1) Give the entries necessary to record the valuations for both trading and available-for-sale securites at December 31, 2013 and 2014.
(2) What net effect would these valuations have on 2013 and 2014 net income?
Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
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