Topic: Accounting for equity securitie...
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Topic: Accounting for equity securities with no significant influence
LO 1
A company invests $300,000 in equity securities on November 30, 2019, and classifies them as
investments with no significant influence. At December 31, 2019, the company’s year-end, the
securities have a fair value of $310,000. On February 1, 2020, the company sells the securities
for $295,000.
Which statement is true regarding how this information is reported in the company’s financial
statements?
a. The company’s December 31, 2019 balance sheet reports the securities at $300,000,
and a gain of $10,000 is reported on the 2019 income statement.
b. The company’s December 31, 2019 balance sheet reports the securities at $310,000,
and a loss of $5,000 is reported on the 2020 income statement.
c. The company’s December 31, 2019 balance sheet reports the securities at $310,000,
and a loss of $15,000 is reported on the 2020 income statement.
d. The company’s December 31, 2019 balance sheet reports the securities at $300,000,
and no gain or loss appears on the 2019 income statement.
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