(Solution) - Research Capital an investment banking company has extra cash to -(2025 Original AI-Free Solution)

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Research Capital, an investment banking company, has extra cash to invest. Suppose Research Capital buys 1,000 shares of Potash Corporation of Saskatchewan at $185 per share. Assume Research Capital expects to hold the Potash shares for one month and then sell them.The purchase occurs on December 15, 2014. At December 31, the market price of Potash is $195 per share.
Requirements
1. What type of investment is this to Research Capital? Give the reason for your answer.
2. Record Research Capital's purchase of the Potash shares on December 15 and the adjustment to fair value on December 31.
3. Show how Research Capital would report this investment on its balance sheet at December
31 and any gain or loss on its income statement for the year ended December 31, 2014.