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Alex777 [14]
2 years ago
9

Harlon accounts for its equity investment portfolio at fair value through net income. Harlon sold its holdings of A Corporation

shares on June 1, 2022, for $15 million. On September 12, it purchased the C Corporation shares. Required: 1. What is the effect of the sale of the A Corporation shares and the purchase of the C Corporation shares on Harlon's 2022 pretax earnings
Business
1 answer:
mixas84 [53]2 years ago
6 0

The sale of the A Corporation stock and the subsequent purchase of the C Corporation stock on Harlon's pretax earnings results in an unrealized holding gain.

The unrealized holding gain occurs because the Harlon Corporation reinvested the sale proceeds with the purchase of C Corporation stock. While the pretax earnings will increase by the gain (difference between the sale proceeds and the investment's book value), the unrealized holding gain <em>is not taxable.</em>

Thus, the effect of the sale increases the pretax earnings in the financial statements but the purchase of another investment cancels its taxation effect for the current moment.

Learn more: brainly.com/question/24188658

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1.                                     Jasper Company

                                      Income Statement

                                                                                         

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Manager can also try controlling the administrative expenses as they are taking a bigger proportion than any other cost/ expense.

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