Financial Accounting

Learn the toughest concepts covered in your Financial Accounting class with step-by-step video tutorials and practice problems.

Receivables and Investments

Available-for-Sale (AFS) Securities

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1

concept

Purchasing Available-for-Sale Securities

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2

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Dividend Revenue for Available-for-Sale Securities

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3

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Unrealized Gains and Losses for Available-for-Sale Securities (1)

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Unrealized Gains and Losses for Available-for-Sale Securities (2)

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Realized Gains and Losses for Available-for-Sale Securities

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6
Problem

Reset Company held investments in available-for-sale securities with a fair value of $180,000 as of December 31, 2017. Reset had originally purchased the investments at a price of $152,000 on January 1, 2017. What is the appropriate amount for Reset to report for these investments on its December 31, 2017 balance sheet?

7
Problem

Chitty Company often has excess cash on hand to invest. Suppose that Chitty purchases 640 shares of Bang Company common stock at a price of $35 per share. Chitty classifies the investment as available-for-sale securities. This purchase occurred on December 9, 2018. As of December 31, the market price of Chitty stock had increased to $41 per share. Chitty’s journal entry on December 31, 2018 related to the investment in Bang Company stock would include: