intermediate accounting questions
Question # 00010038
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Updated on: 03/11/2014 12:01 PM Due on: 03/31/2014
1. (1 point)
On January 1, 2014, Monopoly Corporation purchased a debt security as a held-to-maturity investment. Monopoly paid $358,859 for the 3-year bonds which had a face value of $350,000, a stated rate of 10% and pay interest annually. The bonds were sold to yield 9%, and the investment had a fair value of $354,718 at December 31, 2014.
With respect to this portfolio, what dollar amount will be reported on Monopoly’s December 31, 2014, balance sheet?
Investment in Bonds $___________________
2. (1 point)
Twister Corp owns a stock portfolio with the following 12/31/13 values:
Cost Fair Value
December 31, 2013: $388,000 $371,000
During 2014, Twister sold stocks from its portfolio. Those stocks had a cost basis of $168,000 and were sold for $172,000. Additionally, stocks were purchased for $200,000 as a passive investment. Dividends received during the year totaled $18,000. The investment portfolio had a fair value of $409,000 at December 31, 2014. “Preliminary income” (i.e., income before consideration of these investments) for the year ended December 31, 2014, totaled $100,000.
Part A) Assume the portfolio consists of only trading securities. With respect to this portfolio:
What dollar amount will be reported on Twister’s December 31, 2014, balance sheet?
Investment in Stocks $___________________
What dollar amount would Twister report as net income for the year ended December 31, 2014?
Net Income $___________________
Part B) Instead, assume that the portfolio consist of only available for sale securities, and that Twister reported the following Stockholders’ Equity on its December 31, 2013, balance sheet:
Common Stock $3,925,000
Paid-in-Capital 9,855,000
Accumulated Other Comprehensive Income 390,750
Retained Earnings 7,061,340
With respect to this available for sale portfolio, what dollar amounts will be reported on Twister’s December 31, 2014, balance sheet?
Investment in Stocks $___________________
Accumulated Other Comprehensive Income $___________________
On January 1, 2014, Monopoly Corporation purchased a debt security as a held-to-maturity investment. Monopoly paid $358,859 for the 3-year bonds which had a face value of $350,000, a stated rate of 10% and pay interest annually. The bonds were sold to yield 9%, and the investment had a fair value of $354,718 at December 31, 2014.
With respect to this portfolio, what dollar amount will be reported on Monopoly’s December 31, 2014, balance sheet?
Investment in Bonds $___________________
2. (1 point)
Twister Corp owns a stock portfolio with the following 12/31/13 values:
Cost Fair Value
December 31, 2013: $388,000 $371,000
During 2014, Twister sold stocks from its portfolio. Those stocks had a cost basis of $168,000 and were sold for $172,000. Additionally, stocks were purchased for $200,000 as a passive investment. Dividends received during the year totaled $18,000. The investment portfolio had a fair value of $409,000 at December 31, 2014. “Preliminary income” (i.e., income before consideration of these investments) for the year ended December 31, 2014, totaled $100,000.
Part A) Assume the portfolio consists of only trading securities. With respect to this portfolio:
What dollar amount will be reported on Twister’s December 31, 2014, balance sheet?
Investment in Stocks $___________________
What dollar amount would Twister report as net income for the year ended December 31, 2014?
Net Income $___________________
Part B) Instead, assume that the portfolio consist of only available for sale securities, and that Twister reported the following Stockholders’ Equity on its December 31, 2013, balance sheet:
Common Stock $3,925,000
Paid-in-Capital 9,855,000
Accumulated Other Comprehensive Income 390,750
Retained Earnings 7,061,340
With respect to this available for sale portfolio, what dollar amounts will be reported on Twister’s December 31, 2014, balance sheet?
Investment in Stocks $___________________
Accumulated Other Comprehensive Income $___________________
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Rating:
/5
Solution: intermediate accounting questions