S&L Financial buys and sells securities that it typically classifies as availabl
ID: 2463927 • Letter: S
Question
S&L Financial buys and sells securities that it typically classifies as available-for-sale. On December 27, 2016, S&L purchased Coca-Cola common shares for $935,000 and sold the shares on January 3, 2017, for $937,500. At December 31, the shares had a fair value of $931,000. When it purchased the Coca-Cola shares, S&L Financial decided to elect the fair value option for this investment.
What pretax amounts did S&L include in its 2016 and 2017 earnings as a result of this investment?
S&L Financial buys and sells securities that it typically classifies as available-for-sale. On December 27, 2016, S&L purchased Coca-Cola common shares for $935,000 and sold the shares on January 3, 2017, for $937,500. At December 31, the shares had a fair value of $931,000. When it purchased the Coca-Cola shares, S&L Financial decided to elect the fair value option for this investment.
Explanation / Answer
S& L Financials Amt $ DEc27. 2016. Purchase cost of Coca-Cola Common stock 935,000 Dec 31.2016. Fair value 931,000 Pretax Unrealized Loss on Holding Available for Sale Secutities -OCI 4,000 So 2016 Pretax Net Other Comprehensive Income /(Loss) = (4,000) 2017 Results Sales Proceeds on Jan 3.2017. 937,500 Dec 31.2016. Fair value 931,000 Gain on Sales 6,500 Reclasse of OCI Loss Balance = (4,000) Net Pretax Income 2017 2,500
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.