Reference no: EM131284750
Tablot Inc. acquired the common stock of Evers Inc. for $150,000 on December 1, 2016. At December 31, 2016, the fair value of the Evers common had decreased to $145,000. Compare the effects on Tablot’s financial statements of classifying the investment in Evers common as trading versus available for sale and answer the following questions:
Which classification will result in a higher total stockholders’ equity at December 31, 2016?
A. Trading.
B. Available for sale.
C. Neither—total stockholders’ equity is the same for each classification.
Which classification will result in a higher return on common equity for 2016?
A. Trading.
B. Available for sale.
C. Neither—return on common equity is the same for each classification.
Which classification will result in a higher basic earnings per share for 2016?
A) Trading.
B) Available for sale.
C) Neither—basic earnings per share is the same for each classification.
Which classification will result in a lower debt to equity ratio at December 31, 2016?
A) Trading.
B) Available for sale.
C) Neither—the debt to equity ratio is the same for each classification.
Which classification will result in higher comprehensive income for 2016?
A) Trading.
B) Available for sale.
C) Neither—comprehensive income is the same for each classification.
Which classification will result in a higher asset total at December 31, 2016?
A) Trading.
B) Available for sale.
C) Neither—the asset total is the same for same for each classification.
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: Tablot Inc. acquired the common stock of Evers Inc. for $150,000 on December 1, 2016. At December 31, 2016, the fair value of the Evers common had decreased to $145,000. Which classification will result in a higher total stockholders’ equity at Decem..
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