Aronson,Inc.began business on January 1,2014,and at December 31,2014,Aronson had the following investment portfolios of equity securities: None of the declines is judged to be other than temporary.Unrealized losses at December 31,2014,should be recorded with corresponding charges against
Stockholders'
Income Equity

Question

Aronson,Inc.began business on January 1,2014,and at December 31,2014,Aronson had the following investment portfolios of equity securities:  None of the declines is judged to be other than temporary.Unrealized losses at December 31,2014,should be recorded with corresponding charges against
Stockholders'
Income Equity

Quizplus · Accepted Answer

According to the question, the declines in value of the equity securities are considered to be other than temporary. Therefore, the unrealized losses at December 31, 2014, should be recorded and charged against stockholders' equity. As per the portfolio details given, the total unrealized losses are $70,000 ($40,000 + $30,000). Since the losses are charged against stockholders' equity, the entry would reduce Aronson's total stockholders' equity by $70,000. Therefore, the correct answer is option C ($30,000 reduction in common stock and $40,000 reduction in additional paid-in capital).