question archive During 2010, Latvia Company purchased trading equity securities as a short-term investment
During 2010, Latvia Company purchased trading equity securities as a short-term investment
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During 2010, Latvia Company purchased trading equity securities as a short-term investment. The cost and market value on December 31, 2010 were as follows:
|
Security |
Cost |
Market value |
|
A – 1,000 shares |
200, 000 |
300,000 |
|
B - 10,000 shares |
1, 700,000 |
1, 600,000 |
|
C – 20,000 shares |
3, 100,000 |
2, 900,000 |
|
|
5, 000,000 |
4, 800,000 |
Latvia sold 10,000 shares of Security B on January 15, 2011, for P130 per share, incurring P50, 000 in brokerage commission and taxes.
What should be reported as loss on sale of trading investment in 2011?
|
a. 450,000 b. 400,000 c. 300,000 d. 350,000 |
|
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|
Answer d |
|
|
Sales price (1000 x P130) |
1, 300,000 |
|
Less: Commission and taxes |
50,000 |
|
Net sales price |
1, 250,000 |
|
Less: Carrying amount of B shares on 12/31/2010 |
1, 600,000 |
|
Loss on sale of trading investment |
(350,000) |
