Valix Finacc vol 1 Problem 9-8

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 9-8

1. Unrealized loss – AFS                                                                        100,000

            Available for sale securities                                                                             100,000

2. Cash                                                                                              2,100,000

    Loss on sale of AFS securities                                                            400,000

            Available for sale securities                                                                           2,000,000

            Unrealized loss – AFS                                                                                        500,000

3. No entry

                                                                                               Carrying amount          Market

    XYZ                                                                                                1,200,000          1,200,000

    RST                                                                                                    200,000             200,000

                                                                                                          1,400,000          1,400,000

    Unrealized loss in 2008                                                                                                      0

    Unrealized loss – 12/31/2008 (600,000 – 500,000)                                                (   100,000)

    Cumulative unrealized loss – 12/31/2009                                                          (   100,000)

                                                                                                                                   

Total cost (1,000,000 + 500,000)                                                                            1,500,000      Market value                                                                                                  1,400,000     Cumulative unrealized loss                                                                                            100,000