Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Textbook Question
Chapter 15, Problem 3AP
Stoll Co.’s long-term available-for-sale portfolio at the start of this year consists of the following.
Stoll enters into the following transactions involving its available-for-sale debt securities this year.
The fair values at December 31 are B, $81,000; C, $610,000; X, $118,000; and Z, $278,000.
Required
- 1. Prepare
journal entries to record these transactions, including the December 31adjusting 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. - 3. What amount of gains or losses on transactions relating to long-term investments in available-for-sale debt securities does Stoll report on its income statement for this year?
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Ticker Services began operations in Year 1 and holds long-term investments in available-for-sale debt securities. The year-end cost and
fair values for its portfolio of these investments follow.
Portfolio of Available-for-Sale Securities
December 31, Year 1
December 31, Year 2
December 31, Year 3
December 31, Year 4
View transaction list View journal entry worksheet
Prepare journal entries to record each year-end fair value adjustment for these securities.
No
3
Cost
$11,000
18,900
20,600
14,800
Date
Dec. 31, Year 3 No Transaction Recorded
Fair Value
$17,500
28,000
30, 200
19,700
General Journal
Debit
Credit
Ⓒ
At December 31, 2022, available-for-sale debt securities for Storrer, Inc. are as follows. The securities are considered to be a long-term investment.
Security. Cost. Fair Value
A $17,500 16,000
B 12,500 14,000
C 23,000 21,000
53,000 51,000
A. Prepare the adjusting entry at December 31, 2022 to report the securities at fair value.
B- Show the statement presentation at December 31,2022, after adjustment to fair value.
C- E. Kretsinger, a member of the board of directors, does not understand the reporting of the unreal-
ized gains or losses. Write a letter to Ms. Kretsinger explaining the reporting and the purposes that it serves.
Ticker Services began operations in Year 1 and holds long-term investments in available-for-sale debt securities. The year-end cost and fair values for its portfolio of these investments follow.
Portfolio of Available-for-Sale Securities
December 31, Year 1
December 31, Year 2
Cost
$ 13,000
20,000
23,000
16,500
December 31, Year 3
December 31, Year 4
Complete this question by entering your answers in the tabs below.
Prepare journal entries to record each year-end fair value adjustment for these securities.
Adjustment General Journal
Calculation
Calculation adjustment required to fair value adjustment.
12/31/Year 1 Existing balance in Fair Value Adjustment-AFS (LT)
Required balance in Fair Value Adjustment-AFS (LT)
Adjustment required to Fair Value Adjustment-AFS (LT)
12/31/Year 2 Existing balance in Fair Value Adjustment-AFS (LT)
Required balance in Fair Value Adjustment-AFS (LT)
Adjustment required to Fair Value Adjustment-AFS (LT)
12/31/Year 3 Existing balance in Fair Value…
Chapter 15 Solutions
Principles of Financial Accounting.
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