Changes in Value: Held to Maturity Securities
Refer to Practice 14–10. Make the adjusting journal entries for (a) and (b) and the computations for (c) and (d), assuming that the securities are classified as held to maturity. The changes in value are not deemed to be “other than temporary.”
Practice 14–10
Changes in Value: Trading Securities
On December 1, the company purchased securities for $1,000. On December 31, the company still held the securities. Make the necessary adjusting journal entry to record a change in value of the securities assuming that their December 31 market value was (a) $1,200 and (b) $850. In addition, before considering the impact of the change in value of the securities, the net income for the company was $1,500. Compute net income assuming that the December 31 market value of the securities was (c) $1,200 and (d) $850. Ignore income taxes. Assume that the securities are classified as trading.