Compute the balance sheet value and income effect

Reference no: EM131421437

Levy Company and Guyer Books made the same equity investment-200 shares of Watson Manufacturing at a cost of $12 per share-on November 18. On December 31, the market value of Watson had risen to $45 per share. Guyer Books held its investment in Watson, while Levy sold the shares and immediately repurchased them at the December 31 market value.

REQUIRED:

a. Compute the balance sheet value and income effect associated with these events recorded by the two companies, assuming that the investment was classified as trading and available-for-sale. That is, fill in the following chart with the appropriate dollar values.

Reference no: EM131421437

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