Ask Question
BusinessBusiness
3 September, 11:30

Kevin purchases 1,000 shares of Bluebird Corporation stock on October 3, 2019, for $475,000. On December 12, 2019, Kevin purchases an additional 750 shares of Bluebird stock for $332,500. According to market quotations, Bluebird stock is selling for $475 per share on 12/31/19. Kevin sells 500 shares of Bluebird stock on March 1, 2020, for $266,000.

a. What is the adjusted basis of Kevin?

+1
Answers (1)
  1. 3 September, 13:34
    0
    The adjusted basis of Kevin is:

    Current number of Shares: 1250[After Sales]

    Share Price: $475[Last revaluation figure of Bluebird]

    Current Value: $593,750[1,250 * $475]

    Explanation:

    Recognition of gain on disposal of an investments in Shares are accounted for using the Fair Value method. The Fair value method is applied to Share Investments not exceeding 20% of a company's stock. Investments of this nature are revalued at each reporting date while gain or loss are recognized through Profit and Loss account.

    An income is realized when the value of the sold investments exceeds the reporting value. Likewise a loss is recorded when the value of the sold investments falls below the reporting value.

    Kevin's investment will still be valued at the Bluebird's last revaluation date which is 12/31/19 - $475.

    Therefore the remaining shares of 1250 units is multiplied by $475 to arrive at $593,750
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Kevin purchases 1,000 shares of Bluebird Corporation stock on October 3, 2019, for $475,000. On December 12, 2019, Kevin purchases an ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
When boating on a river, you may encounter strainers. what is the danger of a strainer?
Answers (1)
Your firm has securities available from a SEC Reg D private placement of variable life policies, which are unregistered. One of your fellow RRs would like to place an ad in a financial newspaper regarding the availability of the securities.
Answers (1)
As a baby, charlie resisted being held and showed no interest in human stimulation. usually passive, he sometimes played with his wind-up toys but did not respond to his name being called and showed outbursts of temper if someone moved even one of
Answers (1)
What is discretionary spending within a budget?
Answers (1)
Parwin Corporation plans to sell 42,000 units during August. If the company has 17,500 units on hand at the start of the month, and plans to have 18,500 units on hand at the end of the month, how many units must be produced during the month?
Answers (1)
New Questions in Business
Preparing a Budgeted Income Statement Oliver Company provided the following information for the coming year: Units produced and sold 160,000 Cost of goods sold per unit $6.30 Selling price $11 Variable selling and administrative expenses per unit $1.
Answers (1)
What is NOT one of the three primary resources that families have to reach financial goals?
Answers (1)
Interest groups ___. Are most often set up by or work for elites and corporations Work to influence laws and policies Work to influence court rulings All of these answers
Answers (1)
What if the tile work had proceeded as contracted and looked good, but STR refused to pay, saying it didn't meet their personal satisfaction (even though the contract didn't mention this option). Could STR refuse to pay?
Answers (1)
You want to create a slide that lists the pros and cons of using cloud storage as part of your presentation on business technology. Which pre-set layout would you want to use? A. Content with caption B. Title only C.
Answers (2)
Home » Business » Kevin purchases 1,000 shares of Bluebird Corporation stock on October 3, 2019, for $475,000. On December 12, 2019, Kevin purchases an additional 750 shares of Bluebird stock for $332,500.
Sign Up Forgot Password?