Solution-How are unrealized gains and losses treated

How are unrealized gains and losses treated differently

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Reference no: EM132683720

Problem - Fair value journal entries, available-for-sale investments

Arnott Inc. purchased a portfolio of available-for-sale securities in 2012, its first year of operations. The cost and fair value of this portfolio on December 31, 2012, was as follows:

Name	Number of Shares	Total Cost	Total Fair Value
Jasper, Inc.	600	$ 9,000	$ 10,500
Parker Corp.	900	21,000	23,400
Smithfield Corp.	1,800	32,500	31,900
Total		$62,500	$65,800

On May 10, 2013, Arnott purchased 900 shares of Violet Inc. at $42 per share plus a $125 brokerage fee.

a1. Provide the journal entries to record the adjustment of the available-for-sale security portfolio to fair value on December 31, 2012.

a2. Provide the journal entries to record the May 10, 2013, purchase of Violet Inc. stock.

b. How are unrealized gains and losses treated differently for available-for-sale securities than for trading securities?

Reference no: EM132683720

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How are unrealized gains and losses treated differently

Reference no: EM132683720

Reference no: EM132683720

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