Question

Stoll Co.'s long-term available-for-sale portfolio at December 31, 2016, consists of the following

Stoll Co.'s long-term available-for-sale portfolio at December 31, 2016, consists of the following. Available-for-Sale Securities Fair Value cos t 80,000 shares of Company A common stock 46,000 shares of Company B common stock 43,000 shares of Company C common stock $1,048,600 356,750 919,000 346,000 1,338,875 1,392,000 1, Stoll enters into the following long-term investment transactions during year 2017 Jan. 29 Sold 23,000shares of Company B common stock for $177,375 less a brokerage fee of $3,400 Apr 17 Purchased 23,000 shares of Company W common stock for $490,000 plus a brokerage fee of $4,000. The shares represent a 30% ownership in company W July 6 Purchased 8,000 shares of Company X common stock for $262, 625 plus a brokerage fee of 4,000. The shares represent a 12% ownership in Company X Aug. 22 Purchased 100,000 shares of Company Y common stock for $680,000 plus a brokerage fee of $8,800. The shares represent a 51% ownership in company Y Nov. 13 Purchased 12,000 shares of Company z common stock for $524,300 plus a brokerage fee of $6,800. The shares represent a 5% ownership in company Dec. 9 Sold 80,000 shares of Company A common stock for $1,032,000 less a brokerage fee of $4,100 The fair values of its investments at December 31, 2017, are: B, $172,250; C, $1,230,125; W, $392,000; X, $245,750; Y, $1,072,000; and Z, 567100. Required: 1. Determine the amount Stoll should report on its December 31, 2017, balance sheet for its long-term investments in available-for-sale securities. 2. Prepare any necessary December 31, 2017, adjusting entry to record the fair value adjustment for the long-term investments in available-for-sale securities. Required 1 Required 2 Prepare any necessary December 31, 2017, adjusting entry to record the fair value adjustment for the long-term investments in available-for-sale securities. Fair Value Adjustment Computation-Available-for-Sale Unrealized Amount December 31, 2017 AFS Securities # of shares Cost Fair Value Company B common stock Company C common stock Company X common stock Company Z common stock o $ Total Journal entry worksheet ecos the yearend ainyfor theurties prol as of December 31, 2017 Note: Enter debits before credits. Date Credit General Journal Debit Dec 31 Record entry Clear entry View general journal 3. What amount of gains or losses on transactions relating to long-term investments in available-for-sale securities should Stoll report on its December 31, 2017, income statement?

Answer 1

Ques 1
Dec-31	No. of shares	Cost	FV	Unamortised amount	Gain or loss
Company B	23000	178375	172250
Company C	43000	1392000	1230125
Company X	8000	266625	245750
Company Z	12000	531100	567100
TOTAL		2368100	2215225	152875	Loss
Required dec 31 balance in the Fair value adjustment				152875	Credit
Dec 31 balance in the fair value adjustment account				193475	Credit
Dec 31 required adjustment in Fair vakue adjustment account				40600	Debit
				Fair value adjustment(AFS)
		Balance dec 31			193475
		adjustment		40600
		Balance dec 31			152875
Ques 2
Date	General Jounral	Debit	Credit
Dec-31	Fair value adjustment-AFS	40600
	Unrealised loss-Equity		40600
Ques 3
Loss	-25100
Stock sold	Shares	Cost	Sale	Gain/(Loss)
Co. B	23000	178375	173975	-4400
Co. A	80000	1048600	1027900	-20700
realised gain/(loss)				-25100