On March 15, Carter Company purchased 10,000 shares of Tonya Corp. stock for $35,000. This investment is considered to be an ava

Question

ddd [48]

3 years ago

12

On March 15, Carter Company purchased 10,000 shares of Tonya Corp. stock for $35,000. This investment is considered to be an ava

ilable-for-sale investment. On June 30, the stock had a market value of $38,000. Carter must report:___________

Business

1 answer:

earnstyle [38] · Answer 1 · 2021-12-07T19:29:34+03:00

Answer:

$3000 increase in accumulated other comprehensive income in equity section in the balance sheet.

$3000 increase in Available for sale investments in non current assets section of the balance sheet.

Explanation:

Available for sale investments are those financial assets which are purchased by the entity with intention to sell it before its maturity.Available for sale investments are measured at the fair value, and any subsequent changes in the fair value of Available for sale investment is recorded in the following manner:

In this Case, the carter company shall initially record the 10,000 shares of Tonya Corp. stock at $35,000 in the Non current assets section of the balance sheet.

The increase of $3000(38000-35000) in fair value of stock shall be included in the accumulated other comprehensive income in the equity section of the balance sheet while the available for sale investment included in the Non-current assets section of balance sheet shall also be increased by $3000.