Investment in Equity Securities Simulation (FAR CPA Exam)

[@AM-lu2ei]

You are a great instructor. Patient and able to clearly explain complex topics. Being a trader in one of securities exchanges, I would like to ask 2 questions Why did u add the aquistion exp to the cost ( 6000× $ 241) ? If the brocker charged the company for a quisition transaction, why did not he charge the company when the company sold the shares? In other words the broker always charge us for buy/sell orders. If there are expenses on the sale of( 6000 shares @ $ 260 ) how would we make the journal entry ?

[@universalcpareview]

It's a GAAP specific rule. There is a difference between the fair value of the investment based on the actual share price and the amount capitalized onto the balance sheet. Does that make sense?

[@sonabanu8085]

Are we going to add the acquisition cost in the cost of investment whether it is FVTNI method of equity method?

[@RVC0902]

Wouldn't it be helpful to just keep a running T account?

[@universalcpareview]

Absolutely! I like to run through all of the journal entries so you have the steps, but a t-account would be a little shorter method to getting to the right answer.