Calculate the return on common equity

The following information pertains to Montague Corporation:Net income ………….. $55,000Average common equity ……… $1,500,000Preferred dividends ……….. $7,500Average common shares outstanding ….. 100,000

Required:

Calculate the return on common equity and the earnings per share.

The IASB issued accounting guidance to clarify accounting methods and procedures with respect to debt and equity investments. An important part of the statement concerns the distinction between held-for-collection debt investments, trading debt and equity investments, and non-trading equity investments.Instructions

(a) Why does a company maintain investment portfolios for these different types of investments?

(b) What factors should be considered in determining whether investments should be classified as held-for-collection, trading, or non-trading?

How do these factors affect the accounting treatment for unrealized losses?

 

Solution: