Question

On January 14, 2017, Miller Company purchased the $300,000, 6% face-value bonds of Barney Company for...

On January 14, 2017, Miller Company purchased the $300,000, 6% face-value bonds of Barney Company for $309,000. Miller planned to hold the bonds for several years, but not until their maturity. On December 31, 2017, the bonds had a market value of $306,500. Where would Miller Company report the unrealized holding gain or loss on this investment as of December 31, 2017?

In the “Other gain/loss” section of the Income Statement
In the “Accumulated Other Comprehensive Income” section of the Balance Sheet
On the Statement of Retained Earnings.
None of these answers are correct.

Homework Answers

Answer #1

Answer: None of these answers are correct.

Investments in securities can be classified into 3 types.

1) Held for trading

2) Held till maturity

3) Available for sale

Held for trading are those securities which are bought with the intention to sell them in the short term (within a year).

Held till maturity are those securities which are bought with the intention to hold it till maturity.

Investments which does not belong to first 2 categories fall under investments available for sale.

In this case since they have the intention to hold it for several year but not until maturity the bond is to be classified as available for sale investments. And any unrealized gain/loss from available for sale investments need to be disclosed in other comprehensive income section of the income statement. But since this is not one of the first 3 options the correct answer is None of these answers are correct.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2018, Hoosier Company purchased $944,000 of 10% bonds at face value. The bond...
On January 1, 2018, Hoosier Company purchased $944,000 of 10% bonds at face value. The bond market value was $987,000 on December 31, 2018. Required: Prepare the appropriate journal entry on December 31, 2018, to properly value the bonds assuming the bonds are classified as: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Trading securities. Securities available for sale. Held-to-maturity securities. Record the unrealized holding gain or loss for trading...
Question 15 At December 31, 2017, the available-for-sale debt portfolio for Stellar, Inc. is as follows....
Question 15 At December 31, 2017, the available-for-sale debt portfolio for Stellar, Inc. is as follows. Security Cost Fair Value Unrealized Gain (Loss) A $158,375 $135,750 $(22,625 ) B 113,125 126,700 13,575 C 208,150 230,775 22,625 Total $479,650 $493,225 13,575 Previous fair value adjustment balance—Dr. 3,620 Fair value adjustment—Dr. $9,955 On January 20, 2018, Stellar, Inc. sold security A for $136,655. The sale proceeds are net of brokerage fees. StellarInc. reports net income in 2017 of $1,086,000 and in 2018...
For the year ended December 31, 2020, Parson Corporation reported the following: Net income $300,000 Preferred...
For the year ended December 31, 2020, Parson Corporation reported the following: Net income $300,000 Preferred dividends declared 50,000 Common dividend declared 10,000 Unrealized holding loss, net of tax 5,000 Retained earnings, beginning balance 400,000 Common stock 200,000 Accumulated Other Comprehensive Income, Beginning Balance 25,000 A. Prepare a Statement of Retained Earnings for Parson Corporation in good form. B. Prepare the Stockholders’ Equity section of Parson Corporation’s Balance Sheet in good form.
XYZ Company purchased a land for $ 1,000,000 during 2017 and chooses the revaluation model in...
XYZ Company purchased a land for $ 1,000,000 during 2017 and chooses the revaluation model in accounting for its land.   Below are the following information: Date Fair Value December 31, 2017 $ 1,120,000 December 31, 2018 $ 870,000 December 31, 2019 $ 1,110,000 A ) What is the amount of unrealized gain on revaluation - land for the year 2018? ____ B ) How much is the accumulated other comprehensive income for the year 2018 to be recognized in the...
Pharoah Co. reports the following information for 2017: sales revenue $756,800, cost of goods sold $518,900,...
Pharoah Co. reports the following information for 2017: sales revenue $756,800, cost of goods sold $518,900, operating expenses $89,600, and an unrealized holding loss on available-for-sale securities for 2017 of $54,400. It declared and paid a cash dividend of $12,390 in 2017. Pharoah Co. has January 1, 2017, balances in common stock $363,100; accumulated other comprehensive income $88,700; and retained earnings $91,090. It issued no stock during 2017. Prepare a statement of stockholders’ equity. total retained earnings Accumulated Other Comprehensive...
2017: sales revenue $777,100, cost of goods sold $520,000, operating expenses $89,200, and an unrealized holding...
2017: sales revenue $777,100, cost of goods sold $520,000, operating expenses $89,200, and an unrealized holding loss on available-for-sale securities for 2017 of $53,700. It declared and paid a cash dividend of $11,670 in 2017. Barber Co. has January 1, 2017, balances in common stock $360,400; accumulated other comprehensive income $86,000; and retained earnings $92,040. It issued no stock during 2017. Prepare a statement of stockholders’ equity. Prepare a statement of stockholders’ equity.               Total         Retained Earnings Income       Common Stock...
Pierce Company issued 11% bonds, dated January 1, with a face amount of $800,000 on January...
Pierce Company issued 11% bonds, dated January 1, with a face amount of $800,000 on January 1, 2018. The bonds sold for $739,816 and mature in 2037 (20 years). For bonds of similar risk and maturity the market yield was 12%. Interest is paid semiannually on June 30 and December 31. Pierce determines interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2018, the fair value of the bonds...
Required information [The following information applies to the questions displayed below.] On October 12, 2017, Neptune...
Required information [The following information applies to the questions displayed below.] On October 12, 2017, Neptune Corporation invested $700,000 in short-term available-for-sale marketable securities. The market value of this investment was $730,000 at December 31, 2017, but had slipped to $725,000 by December 31, 2018. Assuming Neptune does not sell this investment, the financial statements prepared at December 31, 2018 will report: Multiple Choice A. The asset Investments in Marketable Securities of $725,000, and a $5,000 Unrealized Holding Loss deducted...
Nugent Corporation purchased $30,000 of Rylander Company's 8% bonds on July 1, 2020 at par. The...
Nugent Corporation purchased $30,000 of Rylander Company's 8% bonds on July 1, 2020 at par. The bonds mature on June 30, 2025. Nugent classifies the investment as a held-to-maturity security. However, on July 1, 2020, Nugent chooses to account for the investment using the fair value option. If the fair value of the Rylander bonds is $31,200 on December 31, 2020, what will be recorded in the adjusting entry made by Nugent Corporation? Group of answer choices Unrealized gain $31,200...
For the year ended December 31, 2020, Transformers Inc. reported the following: Net income $300,000 Preferred...
For the year ended December 31, 2020, Transformers Inc. reported the following: Net income $300,000 Preferred dividends declared 50,000 Common dividend declared 10,000 Unrealized holding loss, net of tax 5,000 Retained earnings, beginning balance 400,000 Common stock 200,000 Accumulated Other Comprehensive Income, Beginning Balance 25,000 What would Transformers report as the ending balance of Retained Earnings? Select one: a. $695,000 b. $645,000 c. $665,000 d. $640,000