Question

Cullumber Corporation has these long-term investments:

Common stock of Vejas Co. (10% ownership), cost $116,090, fair value $110,090;
Common stock of Penn Inc. (30% ownership), cost $222,300, equity $212,890;
Debt investment, cost $96,430, fair value, $163,100.

Prepare the investments section of the balance sheet.

Answer 1

Step-by-step explanation:

The preparation of the investments section of the balance sheet is presented below:

Cullumber Corporation

Investments Section

Debt investment at fair value $163,100

Common stock of Vejas Co at fair value $110,090

Common stock of Penn Inc. at fair value $212,890

Total investments $486,080

The amount which is recorded in the investment section should be fair value, not the cost