Assume the same information as in E17-19 for Lilly Company. In addition, assume that the investment in the Woods Inc. stock was sold during 2015 for $
Assume the same information as in E17-19 for Lilly Company. In addition, assume that the investment in the Woods Inc. stock was sold during 2015 for $195,000. At December 31, 2015, the following information relates to its two remaining investments of common stock.
\r\nCost Fair Value (at purchase date) (at December 31)
\r\nInvestment in Arroyo Company stock $100,000 $140,000
\r\nInvestment in Lee Corporation stock 250,000 310,000
\r\nTotal $350,000 $450,000
\r\nNet income before any security gains and losses for 2015 was $905,000.
\r\nInstructions
\r\n(a) Compute the amount of net income or net loss that Lilly should report for 2015, taking into consideration Lilly’s security transactions for 2015.
\r\n(b) Prepare the journal entry to record unrealized gain or loss related to the investment in Arroyo Company stock at December 31, 2015.