Question

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 Cost Fair Value December 31, Year 1 $ 12,600 $ 16,200 December 31, Year 2 18,200 27,400 December 31, Year 3 21,300 32,000 December 31, Year 4 16,300 21,700 Prepare journal entries to record each year-end fair value adjustment for these securities.

Answer 1

No.	Date	General journal	Debit	Credit
1	Dec. 31, year 1	Fair value adjustment – AFS (LT)	3600
		Unrealized gain – Equity (16200-12600)		3600
2	Dec. 31, year 2	Fair value adjustment – AFS (LT)	5600
		Unrealized gain – Equity ((27400-18200)-3600)		5600
3	Dec. 31, year 3	Fair value adjustment – AFS (LT) (32000-21300)-(27400-18200)	1500
		Unrealized gain – Equity		1500
4	Dec. 31, year 4	Unrealized loss – Equity	5300
		Fair value adjustment – AFS (LT) (21700-16300)-(32000-21300)		5300