Question

Chapter 15 Investments 655 Co.'s long-term available-for-sale portfolio at December 31, 2016, consists of the following. Available-for-Sale Securities 40,000 shares of Company A common stock. 7,000 shares of Company B common stock 17,500 shares of Company C common stock. Problem 15-5A Long-term investment transactions; unrealized and realized gains and losses C2 P3 P4 Fair Value Cost $535,300 159,380 $490,000 154,000 640,938 to the following long-term investment transactions during year 2017. ng Sold 3,500 shares of Company B common stock for $7 9,188 less a brokerage fee of $1,500 . Jan. 17 Purchased 10,000 shares of Company W common stock for $197,500 plus a brokerage fee of ir value Apr $2.400. The shares represent a 30% ownership in Company w 51,750. The shares represent a 10% ownership in Company X. $1.200. The shares represent a 51% ownership in Company Y $2.450. The shares represent a 5% ownership in Company Z. ly 6 Purchased 4,500 shares of Company X common stock for $126,562 plus a brokerage fee of e 22 Purchased 50,000 shares of Company Y common stock for $375,000 plus a brokerage fee of Purchased 8,500 shares of Company Z common stock for $267,900 plus a brokerage fee of Aug. 13 Nov. o Sold 40,000 shares of Company A common stock for $515,000 less a brokerage fee of $4,100 values of its investments at December 31, 2017, are: B, $81,375; C, S610,312: W, $191,250: X Dec. ons and e fair S118. 125: Y, $531,250; and Z, $278,800. Requiree 00., 1. Determine the amount Stoll should report on its December 31, 2017, balance sheet for its long-term investments in available-for-sale securities long-term investments in available-for-sale securities. securities should Stoll report on its December 31, 2017, income statement? Loss-Equity, $20,002 er 31 i 2. Prepare any necessary December 31, 2017, adjusting entry to record the fair value adjustment for the Check (2) C: Unrealized 3. What amount of gains or losses on transactions relating to long-term investments in available-for-sale

Answer 1

Stoll Co Requirement 1&2 Fair value Adjustment Computation - Available for Sale Securities December 31 2017 AFS Securities # of shares Cost Company B Common Stock Company C Common Stock Company X Common Stock Company Z Common Stock Fair Value 81375 610312 118125 278800 1088612 Unrealized amt. Gain or loss 3500 17500 4500 8500 79690 662750 128312 270350 1141102 52490 Loss Required December 31 2017 Balance in the Fair Value Adjustment December 31, 2016 Balance in Fair value adjustment account December 31, 2017 required adjustment to the Fair Value Adjustment 52490 72492 20002 Credit a Credit b Debit b-a Company A Company B CompanyC CostFair Value 535300490000 159380154000 662750 Unrealized amt. 45300 5380 21812 72492 640938 Journal Enteries Particulars Dec-31 Fair Value Adjustment AFS Debit in $ Credit in $ 20002 To Unrealized loss - Equit 20002 Requirement 3 Year 2017 realized gains (losses) Stock 3500 shares of Company B stock 40,000 shares of Company A stock Cost 79690 535300 Sales 77688 510900 Gain (loss) 2002 24400 26402