nidhi.kumar
Oct 31, 2011, 11:42 AM
On November 11, 2011, Wadsworth Company purchased twenty shares of ZZZ for $8 per
share. Wadsworth held the investment for the remainder of 20II, and as of December 31, the
per-share market value of ZZZ had risen to $10. During 2012, Wadsworth sold ten shares of
ZZZ for $9 each, and at the end of 2012, the per-share market price of the remaining tens was $12. During 2013, the remaining shares of ZZZ were sold for $14 each. Assume
that Wadsworth held no other equity investments during this time.
a. Complete the following chart. The first column assumes that the investment was classi·
fied as trading securities; the second column assumes that the investment was classified
as available-for-sale securities.
trading available for sale
2011 income
12/31/11 balance sheet investment value
2012 income
12/31/12 balance sheet investment value
2013 income
Total income ('11 '12 '13)
b. Comment on the differences.
share. Wadsworth held the investment for the remainder of 20II, and as of December 31, the
per-share market value of ZZZ had risen to $10. During 2012, Wadsworth sold ten shares of
ZZZ for $9 each, and at the end of 2012, the per-share market price of the remaining tens was $12. During 2013, the remaining shares of ZZZ were sold for $14 each. Assume
that Wadsworth held no other equity investments during this time.
a. Complete the following chart. The first column assumes that the investment was classi·
fied as trading securities; the second column assumes that the investment was classified
as available-for-sale securities.
trading available for sale
2011 income
12/31/11 balance sheet investment value
2012 income
12/31/12 balance sheet investment value
2013 income
Total income ('11 '12 '13)
b. Comment on the differences.