Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 15, Problem 21E
(a)
To determine
Journalize the stock investment transactions in the books of Incorporation H.
(b)
To determine
Describe the accounting treatment of available-for-sale securities, which makes it distinct from trading securities.
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Storm, Inc. purchased the following available-for-sale securities during Year 1, its first year of operations:
Please see the attachment for details:
The market price per share for the available-for-sale security portfolio on December 31,Year 1, was as follows:
Please see the attachment for details:
a. Provide the journal entry to adjust the available-for-sale security portfolio to fair value on December 31, Year 1.b. Describe the income statement impact from the December 31, Year 1, journal entry.
On February 18, 2016, Union Corporation purchased 10,000 shares of IBM common stock as a long-term investment at $60 per share. On December 31, 2016, and December 31, 2017, the market value of IBM stock is $58 and $61 per share, respectively. Required: 1. What is the appropriate reporting category for this investment? Why? 2. Prepare the adjusting entry for December 31, 2016. 3. Prepare the adjusting entry for December 31, 2017.
Targett Company had no short-term investments prior to the year 2017. It had the following transactions involving short-term investments in available-for-sale securities during 2017.
Required:
Prepare journal entries to record the preceding transactions and events.
Prepare a table to compare the year-end cost and fair values of Targett’s short-term investments in available-for-sale securities. The year-end fair values per share are: Gem Co., $26.50, PepsiCo, $46.50; and Xerox, $13.75. (hint Cost=$164,220)
Prepare an adjusting entry, if necessary, to record the year-end fair value adjustment for the portfolio of short-term investments in the available-for-sale securities. (hint Dr. Unrealized Loss-Equity $4,470)
How do these short-term investments affect Targett’s (a) income statement for year 2017 and (b) the equity section of its balance sheet at year-end 2017?
Chapter 15 Solutions
Financial Accounting
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Ch. 15.MJ - IFRS Activity 1
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