INTERMEDIATE ACCOUNTING-MYACCOUNTINGLAB
3rd Edition
ISBN: 9780136946533
Author: GORDON
Publisher: PEARSON
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Question
Chapter 16, Problem 16.7P
a.
To determine
To prepare: The
b.
To determine
To prepare: The journal
c.
To determine
To prepare: The journal entry to record the sale of D’s common shares.
d.
To determine
To prepare: The journal entry to record the acquisition of FOAH common stock.
e.
To determine
To prepare: The journal entry to adjust the portfolio to fair value at the end of Year 2.
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INVESTMENT PORTFOLIO
General Corporation has the following investments in equity securities at December 31, 2002 (there are no existing
balances in the market adjustment account):
Percentage
of Shares
Owned
Market Price
at 12/31/02
Company
Classification
Shares
Cost
Clarke Corporation
Trading
Available-for-sale
1,000
2%
S75
S78
Marlin Company
4,000
15
34
32
Air Products, Inc.
Available-for-sale
3,000
10
46
43
Required:
1. Prepare any adjusting entries required at December 31, 2002.
2. Illustrate how these investments would be presented on General Corporation's balance sheet at December 31, 2002.
The available-for-sale securities are expected to be held for two to five years.
3. Prepare the journal entry on April 10, 2003, when General Corporation sold the Clarke Corporation investment for $72
per share.
4. Assume that General Corporation still owns its investment in Marlin Company and Air Products at December 31, 2003;
the market prices on that date are $37 for Marlin and $44 for Air…
Fair Value Journal Entries, Trading Investments
Gruden Bancorp Inc. purchased a portfolio of trading securities during Year 1. The cost and fair value of this portfolio on December 31, Year 1, was as follows:
Name
Number of Shares
Total Cost
Total Fair Value
Griffin Inc.
1,400
$18,760
$17,630
Luck Company
750
24,600
22,880
Wilson Company
350
10,500
10,710
Total
$53,860
$51,220
On May 10, Year 2, Gruden Bancorp Inc. purchased 500 shares of Carroll Inc., at $30 per share plus a $90 brokerage commission.
Provide the journal entries to record the following:
a. The adjustment of the trading security portfolio to fair value on December 31, Year 1.
Year 1, Dec. 31
fill in the blank fc5d10fdb048f9d_2
fill in the blank fc5d10fdb048f9d_4
b. The May 10, Year 2, purchase of Carroll Inc. stock.
Year 2, May 10
fill in the blank 1c85c7f3ff9905c_2
14. Open Skies purchased a portfolio of available-for-sale securities during the year. The
cost and fair value of the portfolio is as follows:
Name
Eden Rock
Blue Creek
First Stone
Total
Number of Shares
100
400
450
Total Cost
$3,000
$6,500
$5,400
$14,900
Total Fair Value
$4,800
$5,800
$6,750
$17,350
a. Make the journal entry to record the adjustment of available-for-sale security
portfolio to fair value on December 31;
b. Where will the information be reported on the financial statements?
Chapter 16 Solutions
INTERMEDIATE ACCOUNTING-MYACCOUNTINGLAB
Ch. 16 - Prob. 16.1QCh. 16 - Is reporting an investment at its cost considered...Ch. 16 - Prob. 16.3QCh. 16 - Prob. 16.4QCh. 16 - Prob. 16.5QCh. 16 - Prob. 16.6QCh. 16 - What categories can managers use to classify...Ch. 16 - When is the equity method of accounting for...Ch. 16 - Prob. 16.9QCh. 16 - Can companies apply the fair value option to all...
Ch. 16 - What is the fair value hierarchy for investment...Ch. 16 - Prob. 16.12QCh. 16 - Prob. 16.13QCh. 16 - Prob. 16.14QCh. 16 - Prob. 16.15QCh. 16 - Prob. 16.16QCh. 16 - Prob. 16.17QCh. 16 - Deutsch Imports has three securities in its...Ch. 16 - Prob. 16.2MCCh. 16 - Prob. 16.3MCCh. 16 - Prob. 16.4MCCh. 16 - Prob. 16.5MCCh. 16 - Prob. 16.6MCCh. 16 - Prob. 16.7MCCh. 16 - Prob. 16.1BECh. 16 - Prob. 16.2BECh. 16 - Debt Investments, Trading. Using the information...Ch. 16 - Prob. 16.4BECh. 16 - Prob. 16.5BECh. 16 - Prob. 16.6BECh. 16 - Prob. 16.7BECh. 16 - Prob. 16.8BECh. 16 - Prob. 16.9BECh. 16 - Prob. 16.10BECh. 16 - Prob. 16.11BECh. 16 - Prob. 16.12BECh. 16 - Prob. 16.13BECh. 16 - Notes Receivable. Aaron Anatole accepted a...Ch. 16 - Prob. 16.15BECh. 16 - Prob. 16.16BECh. 16 - Prob. 16.17BECh. 16 - Debt Investments. Impairments. IFRS. For each debt...Ch. 16 - Prob. 16.19BECh. 16 - Prob. 16.1ECh. 16 - Prob. 16.2ECh. 16 - Prob. 16.3ECh. 16 - Prob. 16.4ECh. 16 - Prob. 16.5ECh. 16 - Prob. 16.6ECh. 16 - Prob. 16.7ECh. 16 - Debt and Equity Investments, Available-for-Sale...Ch. 16 - Prob. 16.9ECh. 16 - Equity Investments without a Readily Determinable...Ch. 16 - Prob. 16.11ECh. 16 - Prob. 16.12ECh. 16 - Prob. 16.13ECh. 16 - Equity-Investments, Equity Method. Book Value of...Ch. 16 - Prob. 16.15ECh. 16 - Prob. 16.16ECh. 16 - Notes Receivable. Each of the following three...Ch. 16 - Prob. 16.18ECh. 16 - Prob. 16.19ECh. 16 - Prob. 16.20ECh. 16 - Prob. 16.21ECh. 16 - Prob. 16.22ECh. 16 - Prob. 16.23ECh. 16 - Prob. 16.24ECh. 16 - Prob. 16.25ECh. 16 - Prob. 16.1PCh. 16 - Debt Investments, Trading. Freder Software Group...Ch. 16 - Prob. 16.3PCh. 16 - Equity Investments, Readily Determinable Fair...Ch. 16 - Prob. 16.5PCh. 16 - Prob. 16.6PCh. 16 - Prob. 16.7PCh. 16 - Prob. 16.8PCh. 16 - Prob. 16.9PCh. 16 - Prob. 16.10PCh. 16 - Prob. 16.11PCh. 16 - Equity Investments, Equity Method, Fair Value...Ch. 16 - Prob. 16.13PCh. 16 - Prob. 16.14PCh. 16 - Prob. 16.15PCh. 16 - Prob. 16.16PCh. 16 - Prob. 16.17PCh. 16 - Prob. 16.18PCh. 16 - Prob. 16.19PCh. 16 - Prob. 1JCCh. 16 - Prob. 2JCCh. 16 - Prob. 1SSCCh. 16 - Prob. 1BCCCh. 16 - Prob. 2BCC
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