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Question
Beemer Company has provided the following information regarding its investment portfolios:
Trading securities purchased for $150,000 during 2011 had a fair value of $165,000 as of December 31, 2011 and a fair value of $154,300 as of December 31, 2012.
Available-for-sale securities purchased for $275,000 during 2011 had a fair value of $293,700 on December 31, 2011 and a fair value of $301,900 on December 31, 2012.
Required:
1. Determine the impact that the investment portfolios had on net income during 2012.
2. Determine the amount of the realized gain/loss to be recorded during 2013 if the trading securities were sold for $159,500.
3. Describe the difference in the financial accounting and reporting when comparing trading security portfolios to available-for-sale security portfolios.
Answer
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