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On July 1,2019,Carter Company purchased equity securities as follows: Dark Corporation common stock (par $1) 10,000 shares at $25 per share.
Janin Corporation preferred stock (par $100) 2,000 shares at $105 per share.
The quoted market prices per share on December 31,2019 were as follows:
Dark Corporation stock,$27 per share
Janin Corporation stock,$104 per share
Each of the investments represented 5% of the total shares outstanding.The carrying value amount of the investments at December 31,2019 should be
A) $478,000.
B) $460,000.
C) $458,000.
D) $480,000.
Equity Securities
Financial instruments representing ownership in a company, such as stocks, which provide a claim to a portion of the company's profits and assets.
Market Prices
The current value at which an asset or service can be bought or sold in a marketplace.
Carrying Value
Carrying Value, also known as book value, is the value of an asset as it appears on a balance sheet, calculated by netting the asset against its accumulated depreciation.
- Become familiar with the consequences of fair value adjustments on the financial statements.
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Learning Objectives
- Become familiar with the consequences of fair value adjustments on the financial statements.
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