On December 1, 2009, Fox Corporation purchased 10,000 common shares of Daniels Corporation as a short-term investment. The valuations of these securities on December 31, 2009 are:
On the afternoon of December 31, 2009, the management of Fox is deciding whether to sell its investment in Daniels before the 2009 statements are issued. However, it wants to avoid any loss on the 2009 income statement associated with its short-term investment in Daniels.
A. What advice would you give the management of Fox if its investment in Daniels were classified as trading? Justify your advice.
B. What advice would you give the management of Fox if its investment in Daniels were classified as available-for-sale? Justify your advice.

Question

On December 1, 2009, Fox Corporation purchased 10,000 common shares of Daniels Corporation as a short-term investment. The valuations of these securities on December 31, 2009 are:
  On the afternoon of December 31, 2009, the management of Fox is deciding whether to sell its investment in Daniels before the 2009 statements are issued. However, it wants to avoid any loss on the 2009 income statement associated with its short-term investment in Daniels.
A. What advice would you give the management of Fox if its investment in Daniels were classified as trading? Justify your advice.
B. What advice would you give the management of Fox if its investment in Daniels were classified as available-for-sale? Justify your advice.

Quizplus · Accepted Answer

The Answer of On December 1, 2009, Fox Corporation purchased 10,000 common shares of Daniels Corporation as a short-term investment. The valuations of these securities on December 31, 2009 are:
  On the afternoon of December 31, 2009, the management of Fox is deciding whether to sell its investment in Daniels before the 2009 statements are issued. However, it wants to avoid any loss on the 2009 income statement associated with its short-term investment in Daniels.
A. What advice would you give the management of Fox if its investment in Daniels were classified as trading? Justify your advice.
B. What advice would you give the management of Fox if its investment in Daniels were classified as available-for-sale? Justify your advice.

On December 1, 2009, Fox Corporation Purchased 10,000 Common Shares