Company purchases 1,100 shares of Super Duper common stock at the market price o
ID: 2508284 • Letter: C
Question
Company purchases 1,100 shares of Super Duper common stock at the market price of $81.96 on March ?23, 2016. ?(The equity method does not apply in this? situation.) Adams intends to hold this investment for more than one year. On June ?22, 2016?, Adams receives a cash dividend of $0.41 per share of the Super Duper stock. At? year-end on December? 31, 2016?, the Super Duper common stock that Adams Company holds has a quoted market price of $82.56 per share. Assuming that Adams Company has no other? investments, record the entry to adjust the Super Duper common stock to fair value.
Explanation / Answer
Solution:
As adams intends to hold investment in share for more than one year, therefore these investment will be classified under "Available for Sale Category".
Adjusting Journal Entries - Adams Company Date Particulars Debit Credit 31-Dec Fair value adjustment Dr $660.00 To Unrealised holding gain or loss - Income [($82.56 - $81.96)*1100] $660.00 (Being fair value adjustment for available for sale security recorded)Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.