ACCOUNTING Ch 12 Homework Questo 2 1000 points SL Financial

ACCOUNTING Ch. 12 Homework Questo 2. 10.00 points S&L; Financial buys and sells secunties which it classifies as available-for-sale. On December 27, 2016, S&L; purchased Coca-Cola common shares for $860,000 and sold the shares on January 3, 2017, for $866,000. At December 31, the shares had a fair value of $858.500, and S&L; has the intent and ability to hold the investment until fair value recovers What pretax amounts did S&L; include in its 2016 and 2017 eamings as a result of this investment? Pretax amount 2016 2017 References eBook & Resources Difliculty 2 Medium Check my swork

Solution

1. In 2016, As it is available for sale securities hence the unleazided loss of $ 1500 is a part of other comprehenive income, so not included in income statement.

2. In 2017, pretax profit shall be $866000-$860000 = $6000