joshuabcrutcher
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Joined: 14 Jul 2009
Location: United States
Online Status: Offline
Posts: 9
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| Posted: 29 Jul 2010 at 20:17 | IP Logged
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Q1:
The following data pertains to Tyne Co.'s investments in marketable equity securities:
Market value
Cost 12/31/X2 12/31/X1
Trading $150,000 $155,000 $100,000
Available-for-sale 150,000 130,000 120,000
What amount should Tyne report as net unrealized loss on available-for-sale marketable equity securities at December 31, 20X2, in accumulated other comprehensive income on the balance sheet?
a: 0
b: 10,000
c: 15,000
d: 20,000
Answer is D
Q2:
Information regarding Stone Co's available-for-sale portfolio of marketable equity securities is as follows:
Aggregate cost as of 12/31/X2 $170,000
Market value as of 12/31/X2 148,000
Net realized gains during 20X2 30,000
At December 31, 20X1, Stone reported an unrealized loss of $1,500 to reduce investments to market value. This was the first such adjustment made by Stone on these types of securities. According to SFAS No. 115, in its 20X2 statement of comprehensive income, what amount of unrealized loss should Stone report?
a: 30,000
b: 20,500
c: 22,000
d: 0
Answer is B
Why do we account for the $1,500 in Q2 but not in Q1? If we used the same method in Q2 wouldn't there be an unrealized gain of 10,000 in Q1? Or is it that when they say they REPORTED the loss, they already wrote it down... Right?
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Josh Crutcher
Elizabethtown, Ky
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Topic: AFS Securities
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