10.On December 1, 2009, Fox Corporation purchased 10,000 common shares of Daniels Corporation as a short-term investment. The valuations of these securities on December 31, 2009 are:
Cost
Market Value
Daniels Corporation
$100,000
$70,000
On the afternoon of December 31, 2009, the management of Fox is deciding whether to sell its investment in Daniels before the 2009 statements are issued. However, it wants to avoid any loss on the 2009 income statement associated with its short-term investment in Daniels.
A.What advice would you give the management of Fox if its investment in Daniels were classified as trading? Justify your advice.
B.What advice would you give the management of Fox if its investment in Daniels were classified as available-for-sale? Justify your advice.
11.How does the concept of ‘merger’ differ from an ‘acquisition’?
Already registered? Login
Not Account? Sign up
Enter your email address to reset your password
Back to Login? Click here