Corbit Company has marketable equity securities that have a fair market value at

Question

Corbit Company has marketable equity securities that have a fair market value at year-end that is $13,440 below their cost. Give the required entry if: a. The securities are current assets classified as trading securities. b. The securities are noncurrent assets classified as available-for-sale securities, and the loss is considered to be temporary is considered to be permanent. State where each of the accounts debited in a, b, and c would be reported in the financial c. The securities are noncurrent assets classified as available-for-sale securities, and the loss statements

Explanation / Answer

Part B

It will be shown as deduction in Total Paid Up Capital

Part C

Realized loss will be deducted from Net Income in Income Statement

PArt A

The loss is reported in the income statement as a deduction in arriving at net income

Debit Unrealized loss on available-for-sale securities (-SE) $ 13440 Credit Available-for-sale securities (-A) $ 13440 To record unrealized loss from market decline of available-for-sale securities.

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