<<** Excel table: workbook=robinson fexprs tables; worksheet=dtaals ucgls
FA Module 15: Financial investments – homework assignment
(The attached PDF file has better formatting.)
Homework assignment: Accounting for financial securities
A firm has the following investing transactions, with the market values of the shares:
Stock Y Stock Z
Dec 31: Market Price Transaction Market Price Transaction
20X0 35 buy 25 shares 50 buy 35 shares
20X1 65 buy 60 shares 12 buy 40 shares
20X2 75 buy 15 shares 15 buy 25 shares
20X3 55 sell 55 shares 44 sell 55 shares
The firm classifies Stock Y as available for sale and Stock Z as held for trading. The capital gains and losses are taxed at 20% when they are realized.
A. What are the realized and unrealized capital gains and losses in 20X1?
B. What is pre-tax income in 20X1?
C. What is other comprehensive income in 20X1?
D. What is taxable income in 20X1?
E. What is the deferred tax asset or liability on December 31, 20X1?
F. What are taxes paid in 20X1?
G. What is tax expense in 20X1?
H. What are the realized and unrealized capital gains and losses in 20X2?
I. What is pre-tax income in 20X2?
J. What is other comprehensive income in 20X2?
K. What is taxable income in 20X2?
L. What is the deferred tax asset or liability on December 31, 20X3?
M. What are taxes paid in 20X2?
N. What is tax expense in 20X2?
O. What are the unrealized capital gains and losses in 20X3 before the sale of stock on 12/31/20X3?
P. What are the realized capital gains and losses in 20X3?
Q. What are the unrealized capital gains and losses in 20X3?
R. What is pre-tax income in 20X3?
S. What is other comprehensive income in 20X3?
T. What is taxable income in 20X3?
U. What is the deferred tax asset or liability on December 31, 20X3?
V. What are taxes paid in 20X2?
W. What is tax expense in 20X2?
Check your solutions with the practice problem on capital gains and deferred taxes for Module 13 (deferred tax assets and liabilities) on the discussion forum. The figures differ, but the formulas are the same.
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