INTERMEDIATE ACCOUNTING W/CONNECT
9th Edition
ISBN: 9781307050851
Author: SPICELAND
Publisher: MCG/CREATE
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Textbook Question
Chapter 12, Problem 12.18E
Equity investments; fair value through net income
• LO12-4
The investments of Harlon Enterprises included the following cost and fair value amounts ($ in millions):
Harlon accounts for its equity investment portfolio at fair value through net income. Harlon sold its holdings of A Corporation shares on June 1, 2019, for $15 million. On September 12, it purchased the C Corporation shares.
Required:
1. What is the effect of the sale of the A Corporation shares and the purchase of the C Corporation shares on Harlon’s 2019 pretax earnings?
2. At what amount should Harlon’s securities equity investment portfolio be reported in its 2019 balance sheet?
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Students have asked these similar questions
The investments of Harlon Enterprises included the following cost and fair value amounts ($ in millions):
Fair Value, Dec. 31
2022
N/A
$ 37
Equity Investments
A Corporation shares
B Corporation shares
C Corporation shares.
D Industries shares
Totals
Cost
$ 20
35
15
45
$115
1 Increase
2 Amount
Harlon accounts for its equity investment portfolio at fair value through net income. Harlon sold its holdings of A Corporation shares on
June 1, 2022, for $15 million. On September 12, it purchased the C Corporation shares.
$
2021
$ 14
Required:
1. What is the effect of the sale of the A Corporation shares and the purchase of the C Corporation shares on Harlon's 2022 pretax
$
35
N/A
46
$95
earnings?
2. At what amount should Harlon's securities equity investment portfolio be reported in its 2022 balance sheet?
(For all requirements, enter your answers in millions, (i.e., 10,000,000 should be entered as 10).)
14
50
$101
6 million
5 milion
5. In 2020, the entity purchased the following equity securities for the purpose of
selling them in the near term.
12/31/2021
P1,920,000
Fair Values
6/30/2022
P1,800,000
Cost
P2,000,000
On June 30, 2022, the entity transferred its investment to financial assets at
FVTOCI because of a rare circumstance (arising from a single event that is
unusual and highly unlikely to recur in the near term).
12/31/2022
P1,720,000
What amount should the entity report as unrealized loss in its 2022 profit or
loss?
a. P200,000
b.P120,000
c. P80,000
d.PO
During 2022, Merry Co. purchased the following shares which it classified as FVPL investment:
Shares
No. of Shares
Cost per share at the time of purchase
Fair value per share on December 31, 2022
A
1,000
P100
P80
B
5,000
P20
P25
C
10,000
P4
P5
How much unrealized gain or loss will be recognized in the Profit or Loss Statement for these investments on December 31, 2022?
Chapter 12 Solutions
INTERMEDIATE ACCOUNTING W/CONNECT
Ch. 12 - All investments in debt securities are classified...Ch. 12 - When market rates of interest rise after a...Ch. 12 - Does GAAP distinguish between fair values that are...Ch. 12 - When a debt investment is acquired to be held for...Ch. 12 - Prob. 12.5QCh. 12 - What is comprehensive income? Its composition...Ch. 12 - Why are holding gains and losses treated...Ch. 12 - Prob. 12.8QCh. 12 - Prob. 12.9QCh. 12 - Prob. 12.10Q
Ch. 12 - Under IFRS No. 9, which reporting categories are...Ch. 12 - Prob. 12.12QCh. 12 - Do U.S. GAAP and IFRS differ in the amount of...Ch. 12 - Under what circumstances is the equity method used...Ch. 12 - The equity method has been referred to as a...Ch. 12 - In the application of the equity method, how...Ch. 12 - Prob. 12.17QCh. 12 - Prob. 12.18QCh. 12 - Prob. 12.19QCh. 12 - How does IFRS differ from U.S. GAAP with respect...Ch. 12 - What is the effect of a company electing the fair...Ch. 12 - Define a financial instrument. Provide three...Ch. 12 - Some financial instruments are called derivatives....Ch. 12 - (Based on Appendix 12A) Northwest Carburetor...Ch. 12 - Prob. 12.25QCh. 12 - Prob. 12.26QCh. 12 - (Based on Appendix 12B) Reporting an investment at...Ch. 12 - Prob. 12.28QCh. 12 - Explain how the CECL model (introduced in ASU No....Ch. 12 - Prob. 12.30QCh. 12 - Prob. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Trading securities LO12-3 For the Coca-Cola bonds...Ch. 12 - Available -for-sale securities LO12-4 SL...Ch. 12 - Available -for-sale securities LO12-4 For the...Ch. 12 - Prob. 12.6BECh. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Equity investments and dividends LO12-5 Turner...Ch. 12 - Prob. 12.12BECh. 12 - Prob. 12.13BECh. 12 - Equity method investments LO12-6, LO12-9 Kim...Ch. 12 - Change in principle; change to the equity method ...Ch. 12 - Fair value option; equity method investments ...Ch. 12 - Prob. 12.17BECh. 12 - Impairments (AFS Credit Loss Model) (Appendix 12B)...Ch. 12 - Prob. 12.19BECh. 12 - Prob. 12.20BECh. 12 - Prob. 12.1ECh. 12 - Prob. 12.2ECh. 12 - Securities held-to-maturity LO12-1 FFT...Ch. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Trading securities LO12-1 [This is a variation of...Ch. 12 - Various transactions relating to trading...Ch. 12 - Prob. 12.8ECh. 12 - Securities available-for-sale; adjusting entries ...Ch. 12 - Available -for-sale securities LO12-1, LO12-4...Ch. 12 - Available -for-sale securities LO12-1, LO12-4...Ch. 12 - Available -for-sale securities LO12-1, LO12-4...Ch. 12 - Classification of securities; adjusting entries ...Ch. 12 - Prob. 12.14ECh. 12 - Equity investments; fair value through net income ...Ch. 12 - Equity investments; fair value through net income ...Ch. 12 - Prob. 12.17ECh. 12 - Equity investments; fair value through net income ...Ch. 12 - Investment securities and equity method...Ch. 12 - Equity method; purchase; investee income;...Ch. 12 - Error corrections; equity method investment ...Ch. 12 - Prob. 12.22ECh. 12 - Prob. 12.23ECh. 12 - Prob. 12.24ECh. 12 - Prob. 12.25ECh. 12 - Prob. 12.26ECh. 12 - Prob. 12.27ECh. 12 - Prob. 12.28ECh. 12 - Prob. 12.29ECh. 12 - Prob. 12.30ECh. 12 - Prob. 12.31ECh. 12 - Prob. 12.32ECh. 12 - Accounting for impairments under IFRS (Appendix...Ch. 12 - Prob. 12.1PCh. 12 - Prob. 12.2PCh. 12 - Securities available-for-sale; bond investment;...Ch. 12 - Prob. 12.4PCh. 12 - Various transactions related to trading securities...Ch. 12 - Various transactions related to securities...Ch. 12 - Prob. 12.7PCh. 12 - Various transactions relating to trading...Ch. 12 - Securities held-to-maturity; securities available...Ch. 12 - Investment securities and equity method...Ch. 12 - Prob. 12.11PCh. 12 - Prob. 12.12PCh. 12 - Prob. 12.13PCh. 12 - Equity method LO12-6, LO12-7 On January 2, 2018,...Ch. 12 - Prob. 12.15PCh. 12 - Prob. 12.16PCh. 12 - Accounting for debt and equity investments ...Ch. 12 - Prob. 12.18PCh. 12 - Real World Case 121 Intels investments LO12-4 The...Ch. 12 - Prob. 12.2BYPCh. 12 - Prob. 12.4BYPCh. 12 - Prob. 12.6BYPCh. 12 - Real World Case 127 Comprehensive income Microsoft...Ch. 12 - Continuing Cases Target Case LO12-4, LO12-6...
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