3. Brown Corp. purchased several investment securities during 2015, its first year of operation. The following information pertains to these securities (as of 12/31/2015):
Fair value |
Amortized cost |
|
HTM |
||
ABC bonds |
300,000 |
350,000 |
Insignificant influence equity |
||
BCD stock |
200,000 |
100,000 |
CDE stock |
400,000 |
500,000 |
AFS |
||
DEF bonds |
500,000 |
550,000 |
What is the total $ value reported on Brown’s B/S on 12/31/2015?
Held to maturity debt securities are valued at amortized cost at year end, so $ value of HTM is:
ABC bonds = $350000
When there is a insignificant influence of equity, then the investment is valued at fair value on balance sheet date. So, $ value of insignificant equity is:
BCD Stock = $200000
CDE Stock = $400000
Total = $600000
Available for sale bond securities are valued at fair value on the balance sheet date. So, $ value of AFS is:
DEF bonds = $500000
Total $ value of investment on Brown's B/S on 12 /31/2015 is:
Description | Amount |
HTM | $350000 |
Insignificant debt securities | $600000 |
AFS | $500000 |
Total investment | $1450000 |
3. Brown Corp. purchased several investment securities during 2015, its first year of operation. The following informati...
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