Question

Harry Putts Productions held investments in equity securities​ (in Ellie ​Company) with a fair value of $ 60 comma 000 at December​ 31, 2018. These investments cost Harry Putts Productions $ 57 comma 000 on January​ 1, 2018. What is the appropriate amount for Harry Putts Productions to report for these investments on the December​ 31, 2018​, balance​ sheet? (Assume that Harry Putts has insignificant influence over Ellie ​Company.).

Answer 1

Answer:

The appropriate amount for Harry Putts Productions to report for these investments on the December​ 31, 2018​, balance​ sheet is $60,000

Explanation:

Balance sheet: In the balance sheet, the assets, liabilities, and stockholder equity is recorded. In this the accounting equation is used which is shown below:  

Total assets = Total liabilities + stockholder equity  

The debit and credit side of the balance sheet should always be equal and balanced.  

Moreover, it always is prepared on the specified date.

The investment should be recorded in the balance sheet at the fair value instead of the market value. So, the $60,000 would be reported in the balance sheet ,not the $57,000 as it is the cost value of the investment.