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    Valuing Securities using Accounting Information

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    Discuss what you believe the role of Congress should be related to providing oversight for publicly traded companies. Discuss the effectiveness of the Securities Exchange Commission (SEC) with the oversight it provides for investors in publicly traded companies.

    Discuss what you believe the role of Congress should be related to providing oversight for publicly traded companies. Discuss the effectiveness of the Securities Exchange Commission (SEC) with the oversight it provides for investors in publicly traded companies.

    Investing

    Dr. Washington is very satisfied with the knowledge he has attained during his investment consultation and, with your guidance, he is well on his way to becoming a successful investor in today's securities markets. However, while reading The Wall Street Journal, he came across the termsmortgage-backed securities and investment c

    Equity Securities Entries and Disclosures

    Parrot Company has the following securities in its investment portfolio on December 31, 2010 (all securities were purchased in 2010): 3,000 shares of Ames Co. common stock which cost $58,500 10,000 shares of Master Ltd. common stock which cost $580,000 6,000 shares of Kong Company preferred s

    Purchasing Marketable securities with Excess Cash

    1. What are two problems that may be caused by too much working capital, and what are two problems that may be caused by too little working capital? 2. What are the relative advantages and disadvantages of a conservative asset financing policy and an aggressive asset financing policy? 3. What potential risks might there be in

    Generally, under GAAP, market value is not used as the valuable

    Generally, under GAAP, market value is not used as the valuation basis for assets. Cost is used instead. For marketable securities, however, market value is frequently used. Whatâ??s different about marketable securities that make it reasonable for this class of asset to be reported at market value when most other assets are re

    Analyze the types of securities and financial markets and propose a new type of market that would be better than anything in existence today. Please be as creative as you like.

    ââ?¬¢ Analyze the types of securities and financial markets and propose a new type of market that would be better than anything in existence today. Please be as creative as you like. ââ?¬¢ Propose a new financial system that would provide all the services of a bank or credit union, but would also be completely self-reg

    Distinguish between a debt security and an equity security. B. What are the main distinctions between a traditional financial instrument and a derivative financial instrument? C. For the following investments identify whether they are: Trading Securities Available-for-Sale Securities Held-to-Maturity Securities Each case is independent of the other. 1. A bond that will mature in 4 years was bought 1 month ago when the price dropped. As soon as the value increases, which is expected next month, it will be sold. 2. 10% of the outstanding stock of Farm-Co was purchased. The company is planning on eventually getting a total of 30% of its outstanding stock. 3. 10-year bonds were purchased this year. The bonds mature at the first of next year. 4. Bonds that will mature in 5 years are purchased. The company would like to hold them until they mature, but money has been tight recently and they may need to be sold. 5. Preferred stock was purchased for its constant dividend. The company is planning to hold the preferred stock for a long time. 6. A bond that matures in 10 years was purchased. The company is investing money set aside for an expansion project planned 10 years from now. D. (Trading Securities Entries) On December 21, 2006, Bucky Katt Company provided you with the following information regarding its trading securities. December 31, 2006 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Clemson Corp. stock $20,000 $19,000 $(1,000) Colorado Co. stock 10,000 9,000 (1,000) Buffaloes Co. stock 20,000 20,600 600 Total of portfolio $50,000 $48,600 (1,400) Previous securities fair value adjustment balance â?"0â?" Securities fair value adjustmentâ?"Cr. $(1,400) During 2007, Colorado Company stock was sold for $9,400. The fair value of the stock on December 31, 2007, was: Clemson Corp. stockâ?"$19,100; Buffaloes Co. stockâ?"$20,500. Instructions 1. Prepare the adjusting journal entry needed on December 31, 2006. 2. Prepare the journal entry to record the sale of the Colorado Company stock during 2007. 3. Prepare the adjusting journal entry needed on December 31, 2007. E. (Journal Entries for Fair Value and Equity Methods) Situation 1 Conchita Cosmetics acquired 10% of the 200,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2007. On June 30, Martinez declared and paid a $75,000 cash dividend. On December 31, Martinez reported net income of $122,000 for the year. At December 31, the market price of Martinez Fashion was $15 per share. The securities are classified as available-for-sale. Situation 2 Monica, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles's 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2007. On June 15, Seles declared and paid a cash dividend of $36,000. On December 31, Seles reported a net income of $85,000 for the year. Instructions: Prepare all necessary journal entries in 2007 for both situations.

    Please see attached file for format of the table. A. Distinguish between a debt security and an equity security. B. What are the main distinctions between a traditional financial instrument and a derivative financial instrument? C. For the following investments identify whether they are: Trading Securities Avail

    Management of Cash and Marketable Securities for J-Mart's lockbox system

    J-Mart, a nationwide department store chain,processes all its credit sales payments at its suburban Detroit headquarters. The firm is considering the implementation of a lockbox collection system with an Atlanta bank to process monthly payments from its southeastern region. Annual credit sales collections from the region are $60

    Debt and Equity Securities for Jodelie Odelie Company

    See the attached file. Jodelie Odelie Company has a fairly large portfolio of both debt and stock securities. Here's the portfolio at the beginning of 2009. All securities were purchased on the first day of the year. DEBT SECURITIES FMV at Stated Effective Interest Security

    Long-Term Equity Securities, Temporary Decline, Equity Method

    See attached file for proper format. 1. (2) The following information pertains to Lark Corp's long-term equity securities portfolio: December 31 2011 2010 Cost $200,000 $200,000 Fair Value 240,000 180,000 Difference between cost and market values are considered to be temporary. The decline

    1. The BCD Partnership is being formed by three equal partners, Beta Corporation, Chi Corporation, and Delta Corporation. The partners' tax year-ends are June 30 for Beta, September 30 for Chi, and October 31 for Delta. The BCD partnership's natural business year ends on January 31. a. What tax year(s) can the partnership elect without IRS permission? b. What tax year(s) can the partnership elect with IRS permission? c. How would the answer in part a and b change if Beta, Chi, and Delta own 4%, 4%, and 92%, respectively, of the partnership? 2. Liquidating Distribution. Marinda is a one-third partner in the MWH Partnership before she receives $100,000 cash as a liquidating distribution. Immediately before Marinda receives the distribution, the partnership has the following assets: Assets Partnership's Basis FMV Cash $100,000 $100,000 Marketable securities 50,000 90,000 Investment land 90,000 140,000 Total $240,000 $330,000 At the time of the distribution, the partnership has $30,000 of outstanding liabilities, which the three partners share equally. Marinda's basis in her partnership interest before the distribution was $80,000, which includes her share of liabilities. What are the amount and character of the gain or loss recognized by Marinda and with the MWH Partnership on the liquidating distribution? 3. Passive Income Tax. Oliver organized North Corporation 15 years ago. The corporation made an S election last year after it accumulated $60,000 of E&P as a C corporation. As of December 31 of the current year, the corporation has distributed nine of its accumulated E&P. in the current year, North reports the following results: Dividends from domestic corporations $60,000 Rental income 100,000 Services income 50,000 Expenses related to rental income 30,000 Expenses related to services income 15,000 Other expenses 5,000 The corporation has not provided significant services nor incurred substantial costs in connection with earning the rental income. The services income is derived from the active conduct of a trade or business. a. Is North subject to excess net passive income tax? If so, what is its tax liability: b. What is the effect of the excess net passive income tax liability on North's pass-throughs of ordinary income and separately stated items? c. What advice would you give North regarding its activities?

    1. The BCD Partnership is being formed by three equal partners, Beta Corporation, Chi Corporation, and Delta Corporation. The partners' tax year-ends are June 30 for Beta, September 30 for Chi, and October 31 for Delta. The BCD partnership's natural business year ends on January 31. a. What tax year(s) can the partnership elect

    As a result of highly profitable operations over a number of years, Eastern Manufacturing Corporation accumulated a substantial investment portfolio. In the audit of the financial statements for the year ended December 31, 20X0, the following information came to the attention of the corporation's independent auditor (CPA): 1. The manufacturing operations of the corporation resulted in an operating loss for the year. 2. In 20X0, the corporation placed the securities making up the investment portfolio with a financial institution that will serve as custodian of the securities. Formerly, the securities were kept in the corporation's safe deposit box in the local bank. 3. On December 22, 20X0, the corporation sold and then repurchased on the same day a number of securities that had appreciated greatly in value. Management stated that the purpose of the sale and repurchase was to establish a higher cost and book value for the securities and to avoid the reporting of a loss for the year. Questions A. Under what conditions would the CPA accept a confirmation of the securities on hand from the custodian in lieu of inspecting and counting the securities? B. What disclosure, if any, of the sale and repurchase of the securities would the CPA recommend for the financial statements?

    Can you help me get started with this assignment? As a result of highly profitable operations over a number of years, Eastern Manufacturing Corporation accumulated a substantial investment portfolio. In the audit of the financial statements for the year ended December 31, 20X0, the following information came to the attention

    Valuing Stocks, paying dividends good for shareholders?

    Increasing growth may require investment from the firm and money spent on investment cannot be used to pay dividends. On the one hand, cutting the firm's dividend to increase investment will raise the stock price if and only if the new investment has a positive NPV. Discuss why.

    McKnight Brothers Investments Securities

    Question 7 At December 31, 2009, McKnight Brothers Corp. had the following investments that were purchased during 2000, its first year of operations: Cost Fair Value Trading Securities: Security A $ 700,000 $ 725,000 B 210,000 200,000 Totals $ 910,000 $ 925,000 Securities Available for Sa

    Assume that the real risk-free rate, r* is 3% and that inflation

    Assume that the real risk-free rate, r*, is 3% and that inflation is expected to be 8% in Year 1, 5% in Year 2, and 4% thereafter. Assume also that all Treasury securities are highly liquid and free of default risk. if 2-year and 5-year Treasury notes both yield 10%, what is the difference in the maturity risk premiums (MRPs) on

    Securities and Portfolios

    Question file attached. Problem Hints: Question 2 asks about your friend that now would demand 30% return instead of the 20% that was originally part of your loan. Since you are receiving 20% on the loan, at the end of the year your friend would give you $120 (100 principal + 20 interest). Since your friend demands a 30% rat

    Problem #2 Avalon Corp Trading Securities

    Part Two- Problem 2 Avalon Corp had the following transactions relating to their trading securities portfolio. This is the first year that they have made these investments. February 1st- Bought 1,000 shares of IBM for $75 per share and paid brokerage fees of $1,000. April 1st- Bought $100,000 of 8% U.S. Treasury Bond

    Accounting

    E17-1 (Investment Classifications) For the following investments identify whether they are: 1. Trading Securities 2. Available-for-Sale Securities 3. Held-to-Maturity Securities Each case is independent of the other. (a) A bond that will mature in 4 years was bought 1

    Yields on marketable securities; trade credit discounts

    1. Your firm invests in only three different classes of marketable securities: commercial paper, Treasury bills, and federal agency securities. Recently, yields on these money market instruments of three months' maturity were quoted at 6.10, 6.25, and 5.90 percent. Match the available yields with the types of instruments your fi