Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Question
Chapter 16, Problem 16.9BE
To determine
To prepare: The
Giveninformation:
Number of shares acquired is 40,000
Issue price is $35 per share.
Market price and is $41 each.
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The investments of Charger Inc. include an investment of trading securities of Raiders Inc. purchased on February 24, 20Y7, for $693,000. The
fair value of the securities on December 31, 20Y7, is $924,000.
a. Journalize the entries for the February 24 purchase and the adjustment to fair value on December 31, 20Y7. If an amount box does not
require an entry, leave it blank.
20Y7 Feb. 24
20Y7 Dec. 31
b. How is a unrealized gain or loss for trading investments reported on the financial statements?
The unrealized gain or unrealized loss on trading investments is reported on the
(or a separate item if significant).
Unrealized losses would be
in determining net income, while unrealized gains would be
in
determining net income...
c. If the Raiders Inc. securities had been classified as available-for-sale securities, how would the investment be reported on the financial
statements?
The unrealized gain on available-for-sale investments would be reported as
The debit balance of Valuation…
Required information
[The following information applies to the questions displayed below.]
Kitty Company began operations in the current year and acquired short-term debt investments in trading securities. The
year-end cost and fair values for its portfolio of these debt investments follow.
Portfolio of Trading Securities
Tesla Bonds
Nike Bonds
Ford Bonds
Cost
$15,900
25,200
6,300
Fair Value
$11,925
26,460
5,040
Prepare journal entry to record the December 31 year-end fair value adjustment for the debt securities.
View transaction list
View journal entry worksheet
No
Date
General Journal
1
Dec. 31
Unrealized gain - Income
Fair value adjustment - AFS
Debit
Credit
×
On January I of Year 1, Steve Company purchased the following securities.
Security Type
Classification
Cost
Bond
Trading
$5,000
B
Stock
Trading
27,500
Stock
Available for sale $10,000
D
Bond
Available for sale 17,000
E
Stock
Available for sale
9,200
Steve Company sold all of its investment in Security D for $8,900 on October 31 of Year 1.
On December 31 of Year 1, the following fair values were available for Securities A.BC, and E
(with Security D having been sold on October 31).
Security
Type Classification
Cost Market Value (end Year 1)
A
Bond Trading
55,000
$3,200
Stock Trading
27,500
36,700
Stock Available for sale s10,000
$14,000
Stock Available for sale
9,200
6,000
Compute the TOTAL. amount of net UNrealized gain or loss that will be reported in Steve
Company's OTHER COMPREHENSIVE INCOME for Year 1.
Net gain $8,200
Net gain of $6,000
Net gain $9.000
O Net gain of $7,400
Net gain of $800
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Chapter 16 Solutions
Intermediate Accounting (2nd Edition)
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 - Notes Receivable. On January 1, 2018, Racine...Ch. 16 - Debt Investment, Held to Maturity, Impairments....Ch. 16 - Debt Investment, Impairments, IFRS. Repeat E16-19...Ch. 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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