During 2010, JAT Company purchased trading securities as a short-term investment. The costs of
the securities and their market values on December 31, 2012, are listed below.

Security Cost Market Value
(December 31, 2012)
A $400,000 $200,000
B 200,000 225,000
C 500,000 600,000

JAT had no trading securities in the years before 2012. Before any adjustments related to these
trading securities, JAT had net income of $900,000 in 2012.

1. What is net income (ignoring income taxes) after making any necessary trading security
adjustments?

2. What would net income be if the market value of Security A were $350,000?

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During 2010, JAT Company purchased trading securities as a short-term investment. The costs of
the securities and their market values on December 31, 2012, are listed below.

Security Cost Market Value
(December 31, 2012)
A $400,000 $200,000
B 200,000 225,000
C 500,000 600,000

JAT had no trading securities in the years before 2012. Before any adjustments related to these
trading securities, JAT had net income of $900,000 in 2012.

1. What is net income (ignoring income taxes) after making any necessary trading security
adjustments?

2. What would net income be if the market value of Security A were $350,000?

Leave a Reply

Your email address will not be published. Required fields are marked *