[calicpa]

What exactly is the 4th item referring to and why isn’t it subtracted from net assets?

When preparing a draft of its 2005 balance sheet, Mont, Inc. reported net assets totaling $875,000. Included in the asset section of the balance sheet were the following:

Treasury stock of Mont, Inc. at cost, which approximates market value on December 31 $24,000

Idle machinery 11,200

Cash surrender value of life insurance on corporate executives 13,700

Allowance for decline in market value of noncurrent equity investments 8,400

At what amount should Mont’s net assets be reported in the December 31, 2005 balance sheet?

A. $851,000

B. $850,100

C. $842,600

D. $834,500

Correct!

Preadjusted asset total $875,000

Less Mont stock (24,000)

Corrected total assets $851,000

A firm’s treasury stock is not an asset of that firm. A firm cannot own its own stock. The other items listed are appropriately included in assets.

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[Malissa]

The fourth thing is an allowance account in connection with reporting the non-current equities in accordance with Fair Value.

A subject that is gathering much attention and is partially blamed for the housing crisis.

https://www.fasb.org/summary/stsum157.shtml

F-81
B-81
R-75
A-waiting...failed twice third time's the charm right?

[Malissa]

The fourth thing is an allowance account in connection with reporting the non-current equities in accordance with Fair Value.

A subject that is gathering much attention and is partially blamed for the housing crisis.

https://www.fasb.org/summary/stsum157.shtml

F-81
B-81
R-75
A-waiting...failed twice third time's the charm right?

[Author]

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