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 ?
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?
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.
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 ?
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?
Are we going to add the acquisition cost in the cost of investment whether it is FVTNI method of equity method?
Wouldn't it be helpful to just keep a running T account?
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.