Element Company Had the Following Long-Term Available-For-Sale Securities in Its

question 38

Essay

Element Company had the following long-term available-for-sale securities in its portfolio at December 31 for each of the years listed.The year-end cost and fair values for its portfolio follow.Beginning with Year 1,prepare the appropriate journal entry to record each year-end market adjustment for these securities.
$\begin{array}{|c|c|c|c|}\hline \text { Available-for-Sale Securities } & \text { Cost } & \begin{array}{c}\text { Fair } \\\text { Value }\end{array} \\\hline \text { Year } 1 & \$ 404,500 & \$ \quad 389,900 \\\hline \text { Year } 2 & 406,400 & 412,600 \\\hline \text { Year } 3 & 454,800 & 472,000 \\\hline\end{array}$

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Definitions:

Restraint of Trade

Legal term that describes any type of activity, agreement, or contract that restricts or impedes competition in a market or trade.

Competition Act

Legislation designed to prevent anti-competitive practices, promote and maintain fair competition in the market.

Criminal Law

The body of law pertaining to crimes and punishment, regulating the conduct of individuals and imposing penalties for unlawful acts.

Loss Leader

A pricing strategy where a product is sold at a loss to attract customers, with the expectation that those customers will make additional purchases of more profitable items.