Appendix EX 15-28 Comprehensive income

On May 12, 2014, Chewco Co. purchased 2,000 shares of Jedi Inc. for $112 per share, including the brokerage commission. The Jedi investment was classified as an available-for-sale security.

On December 31, 2014, the fair value of Jedi Inc. was $124 per share. The net income of Chewco Co. was $50,000 for 2014.

Compute the comprehensive income for Chewco Co. for the year ended December 31, 2014.


Answer:

CHEWCO CO.
For the Year Ended December 31, 2014
Net income $50,000
Other comprehensive income (loss):
Unrealized gain on available-for-sale investments* 24,000
Comprehensive income $74,000
* 2,000 shares × ($124 per share – $112 per share)