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Smith Corporation purchases $620,000 of TMI Corporation stock on October 18, 2015. Smith Corporation classifies this investment as a trading security. On December 1, Smith Corporation received a cash dividend of $12,000 on the TMI Corporation stock. On December 31, 2015, Smith Corporation’s investment in TMI Corporation has a fair value of $600,000.
how to account this?
the cash dividend of 12000 can be classified as income.when there is change in the fair value of shares , should they account it? or should they just mention that there is a deterioration in the value in accounts as a note.
thanks
Now Vipin
What are you doing back in F7? You’re P1 and P2 surely
In addition, before I start to think about the answer to Smith Corporation, let me ask you, how has it been treated in the published solution and why do you not trust that published answer?
sir,
i decided to study p1 alone. p2 i deferred to next semester. i just read one chapter in p2 bpp study guide. i got a book, introduction to corporate strategy by johnson, scholes. so much to read. p1 i failed once for 6 marks. so i will study deep this time. i will concentrate on p1 alone.
this question was asked to me by someone else. i couldnt answer it. so i asked it here. sorry.
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