객관식
Quad Enterprises is considering a new three-year investment in marketable securities. Which of the following statements best describes how this investment should be reported on the company's balance sheet at the end of the first year?
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7. Receivables and Investments
Introduction to Investments in Securities
Multiple Choice
Adama Company incurred the following costs related to its purchase of equity securities: purchase price of \$10,000, broker's commission of \$200, and transfer taxes of \$100. What total amount should Adama Company record as the cost of the investment in securities?
A
\$10,000
B
\$10,100
C
\$10,300
D
\$10,200
검증된 단계별 안내1
Step 1: Understand the concept of investment cost. In financial accounting, the cost of an investment includes all expenditures necessary to acquire the investment and prepare it for its intended use. This includes the purchase price, broker's commission, and transfer taxes.
Step 2: Identify the components of the cost of the investment in the problem. The purchase price is \$10,000, the broker's commission is \$200, and the transfer taxes are \$100.
Step 3: Add the purchase price to the broker's commission. This is done because the broker's commission is a necessary cost incurred to acquire the investment.
Step 4: Add the transfer taxes to the sum obtained in Step 3. Transfer taxes are also part of the acquisition cost and must be included in the total cost of the investment.
Step 5: The total amount calculated in Step 4 represents the cost of the investment that Adama Company should record in its financial statements.
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