Solution-Compute the amount of net income or net loss

Compute the amount of net income or net loss

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Reference no: EM133186665

Question - Presented below is information related to the purchases of common stock by Buffalo Company during 2020.

	Cost (at purchase date)	Fair Value (at December 31)
Investment in Azul Company stock	$208,000	$229,000
Investment in Justin Corporation stock	260,000	275,000
Investment in Tiger Inc. stock	189,000	260,000
Total	$657,000	$764,000

In addition, assume that the investment in the Tiger Inc. stock was sold during 2021 for $279,000. At December 31, 2021, the following information relates to its two remaining investments of common stock.

	Cost (at purchase date)	Fair Value (at December 31)
Investment in Azul Company stock	$208,000	$203,000
Investment in Justin Corporation stock	260,000	280,000
Total	$468,000	$483,000

Net income before any security gains and losses for 2021 was $1,170,000.

Required -

(a) Compute the amount of net income or net loss that Buffalo should report for 2021, taking into consideration Buffalo's security transactions for 2021.

(b) Prepare the journal entry to record unrealized gain or loss related to the investment in Azul Company stock at December 31, 2021.

Reference no: EM133186665

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Compute the amount of net income or net loss

Reference no: EM133186665

Reference no: EM133186665

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