Question - During 2010, JAT Company purchased trading securities as a short-term investment. The costs of the securities and their market values on December 31, 2012, are listed below.
Security Cost Market Value
(December 31, 2012)
A $400,000 $200,000
B 200,000 225,000
C 500,000 600,000
JAT had no trading securities in the years before 2012. Before any adjustments related to these trading securities, JAT had net income of $900,000 in 2012.
1. What is net income (ignoring income taxes) after making any necessary trading security adjustments?
2. What would net income be if the market value of Security A were $350,000?