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| Posted: 21 Jan 2016 at 11:02 | IP Logged
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More discussion on this question:
Since the Placid company is using the cost method,
Investment is considered to be "Trading Securities".
These are securities held by a company that it intends
to buy and sell for a short-term profit. These
securities are reported at their fair market value @
each year balance sheet. Gains and losses will be
included on the income statement. They are classified
as unrealized holding gains or losses on the income
statement, and the counter account on the balance
sheet is Valuation allowance for adjusted short-term
investments to market. - Sunny R.
Trading Securities for short term use right? add to
that cost method uses available for sale ? - Mohammad
D.
Equity investments accounted for by using the cost
method are classified as either trading securities or
available‐for‐sale securities, and the value of the
investment is adjusted to market value each year.
Gain/loss will go into Income Statement under cost
method. - Sunny R.
under cost method, securities are treated as
Available-for-sale securities. that is the reason cost
method is also called Available-for-sale method or
Fair value method. Mohammad D...there must be
something else that we are not getting in the question
because I also got the same answer (250,000 in I/S and
150,000 in OCI)... - Kamna K.
per my understanding and what it says in the lectures,
cost method treats securities as available-for-
sale...Kamna K.
Kamna that's my understanding too AFS always used in
cost & add to that doesn't sound right to carry
trading securities for 5 years - Mohammad D.
we all were missing this point... When an investor
sells shares and goes from CONTROL to NON-CONTROL (and
vice versa), the investor must recognize a gain or
loss from the sale of the stock and then remeasure the
remaining non-consolidating interest to fair value.
The fair value adjustment is recognized as an
additional gain or loss on the income statement.
very logical thx! - Mohammad D.
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Topic: Acquisitions: Remeasurement
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