Problem 15-3A Debt investments in available-for-sale securities; unrealized and realized gains and losses LO P3Skip to question [The following information applies to the questions displayed below.] Stoll Co.'s long-term available-for-sale portfolio at the start of this year consists of the following. Available-for-Sale SecuritiesCostFair ValueCompany A bonds$533,600 $492,000 Company B notes 159,310 150,000 Company C bonds 661,900 641,950 Stoll enters into the following transactions involving its available-for-sale debt securities this year. Jan. 29 Sold one-half of the Company B notes for $78,430.July 6 Purchased bonds of Company X for $120,800.Nov. 13 Purchased notes of Company Z for $267,100.Dec. 9 Sold all of the bonds of Company A for $524,100.The fair values at December 31 are B, $82,500; C, $609,100; X, $118,000; and Z, $279,000. Fair Value Adjustment Computation -Available-for-Sale SecuritiesUnrealizedDecember 31 AFS SecuritiesCostFair ValueGain or Loss?AmountCompany B notes$79,655Company C bonds661,900609, 100Company X bonds120,800118,000Company Z notes267,100Total$1,129,455 $727,100 $3LossRequired 2 December 31 Balance in the Fair Value Adjustment accountCreditBalance at beginning of year in the Fair Value Adjustment account70,860CreditDecember 31 required adjustment to the Fair Value Adjustment accountDebitBalance at beginning of year70,860< Required 1Required 2 > Problem 15-3A Debt investments in available-for-sale securities; unrealized and realized gains and lossesLO P3[The following information applies to the questions displayed below.]Stoll Co.'s long-term available-for-sale portfolio at the start of this year consists of the following.Available-for-Sale SecuritiesCostFair ValueCompany A bondsCompany B notesCompany C bonds$533,600159,310661,900$492,000150,000641,950Stoll enters into the following transactions involving its available-for-sale debt securities this year.Jan. 29 Sold one-half of the Company B notes for $78,430.JulyNov. 13 Purchased notes of Company Z for $267,100.6 Purchased bonds of Company X for $120,800.Dec.9 Sold all of the bonds of Company A for $524,100.The fair values at December 31 are B, $82,500; C, $609,100; X, $118,000; and Z, $279,000.Problem 15-3A Part 1 and 2Required:1. Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value adjustmentfor the long-term investments in available-for-sale securities.2. Determine the amount Stoll reports on its December 31 balance sheet for its long-term investments in available-for-sale securities.

The loss and gain is recognized on investment on the basis of fair value of investments.

Answered: Problem 15-3A Debt investments in…

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

ChapterD: Investments

Section: Chapter Questions

Problem D.11EX: Valuing available-for-sale securities at fair value On January 1. 20Y5. Valuation Allowance for...

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Problem 15-3A Debt investments in available-for-sale securities; unrealized and realized gains and losses LO P3

Skip to question

[The following information applies to the questions displayed below.]

Stoll Co.'s long-term available-for-sale portfolio at the start of this year consists of the following.

Available-for-Sale Securities	Cost	Fair Value
Company A bonds	$	533,600	$	492,000
Company B notes		159,310		150,000
Company C bonds		661,900		641,950

Stoll enters into the following transactions involving its available-for-sale debt securities this year.

Jan.	29	Sold one-half of the Company B notes for $78,430.
July	6	Purchased bonds of Company X for $120,800.
Nov.	13	Purchased notes of Company Z for $267,100.
Dec.	9	Sold all of the bonds of Company A for $524,100.

The fair values at December 31 are B, $82,500; C, $609,100; X, $118,000; and Z, $279,000.

Fair Value Adjustment Computation -
Available-for-Sale Securities
Unrealized
December 31 AFS Securities
Cost
Fair Value
Gain or Loss?
Amount
Company B notes
$
79,655
Company C bonds
661,900
609, 100
Company X bonds
120,800
118,000
Company Z notes
267,100
Total
$
1,129,455 $
727,100 $
3
Loss
Required 2 December 31 Balance in the Fair Value Adjustment account
Credit
Balance at beginning of year in the Fair Value Adjustment account
70,860
Credit
December 31 required adjustment to the Fair Value Adjustment account
Debit
Balance at beginning of year
70,860
< Required 1
Required 2 >

Problem 15-3A Debt investments in available-for-sale securities; unrealized and realized gains and losses
LO P3
[The following information applies to the questions displayed below.]
Stoll Co.'s long-term available-for-sale portfolio at the start of this year consists of the following.
Available-for-Sale Securities
Cost
Fair Value
Company A bonds
Company B notes
Company C bonds
$533,600
159,310
661,900
$492,000
150,000
641,950
Stoll enters into the following transactions involving its available-for-sale debt securities this year.
Jan. 29 Sold one-half of the Company B notes for $78,430.
July
Nov. 13 Purchased notes of Company Z for $267,100.
6 Purchased bonds of Company X for $120,800.
Dec.
9 Sold all of the bonds of Company A for $524,100.
The fair values at December 31 are B, $82,500; C, $609,100; X, $118,000; and Z, $279,000.
Problem 15-3A Part 1 and 2
Required:
1. Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value adjustment
for the long-term investments in available-for-sale securities.
2. Determine the amount Stoll reports on its December 31 balance sheet for its long-term investments in available-for-sale securities.

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