Presented Below Are Unrelated Cases Involving Investments in Equity Securities

question 69

Essay

Presented below are unrelated cases involving investments in equity securities.Case
I.The fair value of the trading securities at the end of last year was 30% below original cost, and this was properly reflected in the accounts. At the end of the current year, the fair value has increased to 20% above cost.Case
II.The fair value of an available-for-sale security has declined to less than forty percent of the original cost. The decline in value is considered to be other than temporary.Case
III.An equity security, whose fair value is now less than cost, is classified as trading but is reclassified as available-for-sale.
InstructionsIndicate the accounting required for each case separately.

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Definitions:

Provincial Personal Property

Property, excluding real estate, owned by individuals or entities within a specific province.

Automobile

A self-propelled vehicular machine designed primarily for transportation of people or goods over roads.

Loan

Money, property or other material goods given to another party in exchange for future repayment of the loan value or principal amount, along with interest or finance charges.

Chattel Mortgage

A loan arrangement in which an item of movable personal property acts as collateral for the loan.