Answered

At Westonci.ca, we make it easy to get the answers you need from a community of informed and experienced contributors. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts.

Wright Company has available-for-sale debt securities that it had originally acquired at part for $110,000. On December 31, 2017, the securities had a market value of $108,000. The market value rose to $123,000 by December 31, 2018. What accounting action is required on December 31, 2018

Sagot :

Parrain

Answer: A) Allowance for Change in Fair Value of Investments should be credited for $15,000

Explanation:

Available-for-sale securities are bought by a company with the intention of selling it before it matures.

It has to be recorded at fair value so when there is a change in value, this is reflected in the books. If there is an increase, the increase or gain goes to the Allowance for Change in Fair Value of Investments account under Other Comprehensive income.

The change in value here is:

= Current market value - Original market value

= 123,000 - 108,000

= $15,000

Thank you for choosing our service. We're dedicated to providing the best answers for all your questions. Visit us again. We appreciate your time. Please come back anytime for the latest information and answers to your questions. Your questions are important to us at Westonci.ca. Visit again for expert answers and reliable information.