Trattoria,Inc At December 31,Year 1,the Market Value of Tarbet's Shares Was

question 28

Essay

Trattoria,Inc.engaged in the following investment transactions during Year 1:
$\begin{array}{|l|l|}\hline 1 . & \begin{array}{l}\text { purchased } 200 \text { shares of the Tarbet } \\\text { Corporation for } \$ 11,500\end{array} \\\hline 2 . & \begin{array}{l}\text { received a } \$ 1.50-\text { per-share dividend on the } \\\text { Tarbet shares }\end{array} \\\hline 3 . & \begin{array}{l}\text { sold } 50 \text { shares of the Tarbet Corporation for } \\\$ 55 \text { per share }\end{array} \\\hline\end{array}$
At December 31,Year 1,the market value of Tarbet's shares was $54.
$\begin{array}{|l|l|}\hline \text { A) } & \begin{array}{l}\text { Prepare journal entries to record this } \\\text { investment assuming management intends to } \\\text { hold this investment for less than a month. }\end{array} \\\hline \text { B) } & \begin{array}{l}\text { Calculate the market value of the company's } \\\text { investment at December 31, Year 1. }\end{array} \\\hline \text { C) } & \begin{array}{l}\text { Prepare the necessary journal entry at } \\\text { December 31, Year 1. }\end{array} \\\hline \text { D) } & \begin{array}{l}\text { How should this investment be disclosed in } \\\text { the December 31, Year 1 financial } \\\text { statements? }\end{array} \\\hline\end{array}$

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Definitions:

Project

An organized task or set of activities with a start and end date, aimed at achieving a specific goal or creating a unique product, service, or result.

Net Present Value

The disparity between the current value of incoming cash and the current value of outgoing cash over a certain timeframe.

Salvage Value

The estimated residual value of an asset at the end of its useful life, often considered for depreciation calculations.

Cash Inflows

The total amount of money being transferred into an entity, coming from various sources like sales, financing, or investments.