Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 16, Problem 16.8E
Debt and Equity Investments, Available-for-Sale Debt and Equity with Fair Values Readily Determinable. Greenburg Company reported the following investment activity occurring at January 1 of the current year. Greenburg does not have significant influence over the investees.
| Description | Amount Paid | Portfolio |
| Investment in bonds ($5,600,000 par value, 7% coupon, annual interest paid on December 31, 15 years to maturity, 9% effective yield) | $4,697,203 | Held to maturity |
| Investment in publicly traded common stock (100,000 shares. $33 per share acquisition price) | 3,300,000 | |
| Investment in publicly traded preferred stock (75,000 shares, $10 par, $10,000 annual dividend, $18 per share acquisition price) | 450,000 |
Required
- a. Prepare the
journal entry required to record the acquisition of the investments at the beginning of the current year. - b. Prepare the journal entries to record interest and dividend income at year-end assuming that Greenburg receives the dividends on the
preferred shares. - c. Prepare the journal entries required to adjust the carrying amount of the investments to their fair values at the end of the first year: bonds. $4,595,425; common stock. $38 per share, and preferred stock, $12 per share.
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Debt investment transactions, available-for-sale valuationSoto Industries Inc. in an athletic foot ware company that beganoperations on January 1, Year 1. The following transactions relate to debtinvestments acquired by Solo Industries Inc., which has a fiscal yearending on December 31:
Instructions1. Journalize the entries to record these transactions.2. If the bond portfolio is classified as available for sale, what impactwould this have on financial statement disclosure?
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
Ⓒ
Waterton Corporation reported that short-term investments in debt securities consisted of the following (in millions):
Amortized Cost Fair Value December 31 Short-term investments available - for - sale debt securities $1,373.6 $1,373.8
Short-term investments-trading debt securities 161.8 132.0 Total short-term investments $1,535.4 $1,505.8 Which of
the following is true? Select one: a. Unrealized losses of $29.8 million on trading securities are included in annual
income. b. Waterton's year-end balance sheet includes short-term investments of $1,535.4 million. c. There are no
net unrealized gains on available-for-sale securities. d. Accumulated other comprehensive income included no
unrealized gains or losses. e. None of these are correct
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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