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Homework answers / question archive / Investment in Marketable Securities on January 3, 2011, Matthew Corporation purchased the following equily securities ac an investment

Investment in Marketable Securities on January 3, 2011, Matthew Corporation purchased the following equily securities ac an investment

Accounting

Investment in Marketable Securities on January 3, 2011, Matthew Corporation purchased the following equily securities ac an investment. The securities and Company Number of Costot Share Total Cost A NO $ 16,000 2.000 12 24.00 C 000 22 000 On December 31, 20x1, the market values per te were Comany Marlotta 22 B 12 20 Prepare anyjournal entry or entries necessary to record these changes in market value HTML wei

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.If fair value of equity changes during a periode, the unrealized gain or loss will record in income statement as unrealized gain or loss.investment account will increase or decrease with corresponding to fair value

Book value of investment A(800 shares @20)=16,000
Fair value of investment=Number of sharesA * Market value of A per share=800 * 22=17,600

Increase or decrease in value of investment= Fair value of investment-Book value of investment A=17,600 -16,000=1,600 increase

Debit    Credit
Investment A    1600    
Unrealised gain        1,600
Market value and cost of invstment B is same
No journal entries needed.No gain or loss and change in value of investment

Value of investment C is decreased
cost of investment =22 per share

market value per share=20

Cuurent book value or cost of investment C(400 shares @ 22)=8,800

Number of shares=400

Current market value of investment C= Market value of 1 share * Number of shares=400 *20=8,000

Gain or loss from investment C=Current market value of investment C- cost of investment C= 8,000- 8,800= 800 loss

Debit    Credit
Investment C        800
Unrealised loss    800