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Mademuasel [1]
3 years ago
5

At the end of Year 1, Lane Co. held debt securities classified as trading that cost $86,000 and which had a year‐end fair value

of $92,000. During Year 2, all of these securities were sold for $104,500. At the end of Year 2, Lane had acquired additional trading securities that cost $73,000 and that had a year‐end fair value of $71,000. What is the impact of these activities on Lane's Year 2 income statement?
Business
2 answers:
Mila [183]3 years ago
7 0

Answer:

additional revenue $10,500

Explanation:

Lane Co. must include in its income statement for year 2 both the realized gain on the sale of securities plus the unrealized losses of the second securities.

the realized gains = sales price - carrying value = $104,500 - $92,000 = $12,500

the unrealized losses = fair market value - cost = $71,000 - 73,000 =  -$2,000

total impact = $12,500 (gains) - $2,000 (losses) = $10,500

yuradex [85]3 years ago
3 0

Answer: Sale of debt securities held. The profit of $12500 is  recognized as income in the financial statements. The  Acquisition of Additional trading securities doesnot affect the income statement it is a balance sheet transaction

Explanation:

debt securities were sold for $104500. The debt securities had a cost of 86000 and a Fair value of $92000. since the value of the Debt securities would have been Recognized at their Fair Value of $ 92000 in the Balance sheet, the Profit on Sale (Income) of debt securities in year 2 will be

104500 - 92000 = 12500.

A profit on sale (income) of 12500 would be Recognized in the income statement for year 2.

The Acquisition of additional Trading securities at a cost of $73000 will not affect the income statement because acquisition of an asset is not an expense. the acquisition of additional trading securities will only affect the Balance Sheet

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Answer: The reduction in spending by the unemployed workers will further lower incomes

Explanation:

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6 0
3 years ago
On October 1, 2019, Illini Company purchased a truck for $42,000. The truck is expected to have a salvage value of $3,000 at the
Nady [450]

Answer:

$3250

Explanation:

Given that

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Salvage value = 3000

Useful life = 3 years

Recall that using straight line method

Depreciation value per year = (purchase price - salvage value) ÷ useful life

Thus,

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= 39000 ÷ 3

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Thus, value of depreciation by Dec 31

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= 0.25 × 13000

= $3250

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5 0
4 years ago
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when a company will reduce the number of projects they have to manage internally to only core projects and send noncritical proj
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8 0
1 year ago
Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have authority to make investments as neede
bezimeni [28]

Answer:

1. 20%

2. 25.20%

3. 24.00%

Explanation:

1. The computation of return on investment is shown below:-

Return on investment = Operating income ÷ Average operating assets

= $70,000 ÷ $350,000

= 20%

2. The computation of return on investment (ROI) is shown below:-

Return on investment = Operating income ÷ Average operating assets

= ($70,000 + $18,200) ÷ $350,000

= $88,200 ÷ $350,000

= 25.20%

3. The computation of return on investment (ROI) is shown below:-

Return on investment = Operating income ÷ Average operating assets

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= $84,000 ÷ $350,000

= 24.00%

So, we have applied the above formula.

7 0
3 years ago
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Vlad1618 [11]

Answer: Option (C)

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8 0
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