Chapter D, Problem D.14EX

Balance sheet presentation of available-for-sale investments

During 20Y8, its first year of operations, Galileo Company purchased two available-for-sale investments as follows:

Security	Shares Purchased	Cost
Hawking Inc	900	$44,000
Pavlov Co.	1,780	38,000

Assume that as of December 51, 20Y8, the Hawking Inc. stock had a market value of $50 pc-r share, and the Pavlov Co. stock had a market value of $24 per share. Galileo Company had net income of $300,000 and paid no dividends for the year ended December 31, 20Y8. All of the available-for-sale investments are classified as current assets.

• A. Prepare the current assets section of the balance sheet presentation for the available- for-sale investments.
• B. Prepare the stockholders' equity section of the balance sheet to reflect the earnings and unrealized gain (loss) for the available-for-sale investments.