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Reporting of securities

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Weston Company has these data at December 31, 2017, the end of its first year of operations.

Securities Cost Fair Value
Trading $110,000 $122,000
Available‐for‐sale100,000 96,000
The available‐for‐sale securities are held as a long‐term investment.
Instructions
(a) Prepare the adjusting entries to report each class of securities at fair value.
(b) Indicate the statement presentation of each class of securities and the related unrealized gain (loss) accounts.

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Solution Summary

The solution file contains the adjusting entries to report each class of securities at fair value and its' statement presentation with its related unrealized gain/loss.

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(a)
Fair value adjustment - Trading securities [Debit} $12,000
. Unrealized gains (loss) on trading securities - Income st. [Credit] $12,000
[Unrealized gain = Fair value $122,000 - Cost $110,000 = $12,000]
Note that there is an unrealized gain and hence it is ...

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