Question

A Debt Service Fund accumulates resources to retire debt that is due in a lump sum in the year 2021. The Fund held marketable securities that cost $900,000 when purchased during 2013 and 2014. The securities had fair values of $875,000 on January 1, 2020, and $930,000 on December 31, 2020. The average fair value during the year was $895,000. At what amount should the Fund report the securities in its balance sheet on December 31, 2020

Answer 1

$930,000

Step-by-step explanation:

The computation of the amount that should the Fund report the securities in its balance sheet on December 31, 2020 is shown below;

Here on the balance sheet, only fair value should be recorded i.e.. $930,000

So as per the given situation, no other amount should be reported

hence, the amount that should the Fund report the securities in its balance sheet on December 31, 2020 is $930,000