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XYZ Co. issues common stock on April 1, 2015. If the market price of the company’s...

XYZ Co. issues common stock on April 1, 2015. If the market price of the company’s stock on December 31, 2015 is higher than on April 1, 2015, then the balance in the common stock account on XYZ’s balance sheet will also increase. True or False

ABC Co. purchased XYZ Co.’s publicly traded stock on March 1, 2016 for trading purpose. If the market price of the stock on December 31, 2016 is higher than on March 1, 2016, then the balance in the trading security account on ABC’s balance sheet will also increase. True or False

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Answer #1

Changes in market value of common stock will not have any impact on issuing company books of accounts. but it will affect in the books of purchaser, who invested in shares.

Q1. this statement is False, XYZ Co balance sheet will not have any impact

Q2. This statement is true, since ABC co should revalue their investment at the end of the year based on market value, since it is a traded security

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