Whole Food Kitchen bought a long-term investment on January 1, 20X1. Information on the investment is...
Whole Food Kitchen bought a long-term investment on January 1, 20X1. Information on the investment is as follows.
| Cost | 470,000 |
| Fair value at December 31, 20X1 | 512,000 |
| Fair value at December 31, 20X2 | 531,000 |
| Fair value at December 31, 20X3 | 494,000 |
| Tax rate | 21% |
What is the balance of accumulated other comprehensive
income at December 31, 20X3?
Homework Answers
| Working Notes: | |||
| Accumulated other comprehesive income is part of Shareholder's Equity | |||
| Any gain or losses from trading securities is unrealised till these securities | |||
| are not sold so balance of increase or decreae in value is shown as accumulated | |||
| and other comrehensive income in shareholder's Equity | |||
| Unrealized Gain for the year 20X1 = | $ 5,12,000 | ||
| Less : Cost | $ 4,70,000 | ||
| Unrealized Gain = | $ 42,000 | ||
| Unrealized Gain for the year 20X2 = | $ 5,31,000 | ||
| Less : Fair value of investment as on 20X1 = | $ 5,12,000 | ||
| Unrealized Gain = | $ 19,000 | ||
| Unrealized Loss for the year 20X3 = | $ 4,94,000 | ||
| Less : Fair value of investment as on 20X2 = | $ 5,31,000 | ||
| Unrealized Gain = | $ -37,000 | ||
| Solution: | |||
| Calculation of Balance of Accumulated other comprehensive income | |||
| At December 31, 20X3 | |||
| Unrealized Gain for the year 20X1 = | $ 42,000 | ||
| Unrealized Gain for the year 20X2 = | $ 19,000 | ||
| Unrealized Loss for the year 20X3 = | $ -37,000 | ||
| Total / Balance as on December 31, 20X3 | $ 24,000 | ||
| Answer = $ 24,000 | |||
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