Question

Balance Sheet Presentation of Available-for-Sale Investments During Year 1, its first year of operations, Galileo Company purchased two available-for-sale investments as follows:
Security Shares Purchased Cost
Hawking Inc. 900 $44,000
Pavlov Co. 1,780 38,000
Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $50 per share and the Pavlov Co. stock had a market value of $24 per share. Galileo Company had net income of $300,000 and paid no dividends for the year ended December 31, Year 1. All of the available-for-sale investments are classified as current assets.
Prepare the Current Assets section of the balance sheet presentation for the available-for-sale investments.

Answer 1

Answer:Please see below

Explanation:

Security Shares       Purchased Cost

Hawking Inc.              900        $44,000

Pavlov Co.                1,780        $ 38,000

total                                            $82,000

In December 31st, the Hawking Inc. stock with  market value of $50 per share and the Pavlov Co. stock had a market value of $24

Stock        Number of shares       market value per share   value

Hawking Inc.     $50                         900                          $45,000

Pavlov Co.        $24                        1780                            $42,720

Total  value                                                                       $87,720

Unrealized gain/loss =   $87,720 - $82,000 = $5,720

Galileo Company  Balance sheet

Current assets

Available for sale investments at cost             $82,000

Allowance available for sale investments         $5,720

Available for sale at fair value                          $87,720