15.3 5. The investments of Charger Inc. include a single investment: 12,940 shar
ID: 2554014 • Letter: 1
Question
15.3
5.
The investments of Charger Inc. include a single investment: 12,940 shares of Raiders Inc. common stock purchased on February 24, Year 1, for $38 per share including brokerage commission. These shares were classified as trading securities. As of the December 31, Year 1, balance sheet date, the share price had increased to $44 per share.
Required:
A. Journalize the entries to acquire the investment on February 24, and record the adjustment to fair value on December 31, Year 1. Refer to the Chart of Accounts for exact wording of account titles.
A. Journalize the entries to acquire the investment on February 24, and record the adjustment to fair value on December 31, Year 1. Refer to the Chart of Accounts for exact wording of account titles. B. How is the unrealized gain or loss for trading investments reported on the financial statements?Explanation / Answer
Answer = A) Journal Entries Date ACCT Title and explanation Debit Credit Feb, 24 , Year 1 Investments-Raiders Inc. Stock (12,940 Shares X $ 38) $4,91,720 To Cash $4,91,720 (To Record the Purchase of investment) Dec , 31 , Year 1 Investments-Raiders Inc. Stock (12,940 Shares X $ 6 ($ 44 - $ 38)) $77,640 To Unrealized Gain (Loss) on Trading Investments $77,640 (To Adjustment for fair value of investment at the year end) Answer = B) Gain on the financial statement will shown in comprehensive financial income statement as income from unrealized gain (Loss) on trading securities IT should be added in net income and will shown in comrehensive financial income statements
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