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[The following information applies to the questions displayed below.]
The accounting records of Jamaican Importers, Inc., at January 1, 2021, included the following:
| Assets: | ||||
| Investment in IBM common shares | $ | 2,245,000 | ||
| Less: Fair value adjustment | (235,000 | ) | ||
| $ | 2,010,000 | |||
No changes occurred during 2021 in the investment portfolio
Required:
1. Prepare appropriate
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- Cheyenne Corporation purchases equity securities costing $150,900 and classifies them as available-for-sale securities. At December 31, the fair value of the portfolio is $154,700.Prepare the adjusting entry to report the securities properly. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amountIf answered within 30mins,it would be appreciable!! Answer all the subparts a,b,c On December 31, 2020, CFR Co. provided the following information as at December 31, 2020 about its investment accounts that it acquired for trading purposes:Carrying Amount Fair ValueABC Ltd. shares $15,000 $17,500Ace Ventura Corp. shares 24,300 22,500Shrek Ltd. Shares 75,000 80,200During 2021, Ace Ventura Corp. shares were sold for $23,000 and 50% of the Shrek shares were sold for $42,000. At the end of 2021, the fair value of ABC shares was $19,200 and Shrek Ltd. was $41,000. CFR follows IFRS.Required:a. Prepare the adjusting entry for December 31, 2020, if any.b. Prepare the entry for the Ace Ventura and Shrek sales.c. Prepare the adjusting entry for December 31, 2021, if any.On its December 31, 2020 balance sheet, Wildhorse Company appropriately reported a $10,000 debit balance in its Fair Value Adjustment account. There was no change during 2021 in the composition of Wildhorse’s portfolio of debt investments held as available-for-sale debt securities. The following information pertains to that portfolio: Security Cost Fair value at 12/31/21 X $148000 $187000 Y 118000 103500 Z 211000 161000 $477000 $451500 The amount of unrealized loss to appear as a component of comprehensive income for the year ending December 31, 2021 is $24500. $35500. $39000. $0.
- Pharoah Company has these data at December 31, 2022, the end of its first year of operations. Debt Securities Trading Available-for-sale (a) Cost $119,700 100,300 The available-for-sale securities are held as a long-term investment. Fair Value $125,700 98,300 Prepare the adjusting entries to report: (1) Trading securities at fair value and (2) Available-for-sale securities at fair value. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation (1) Debit CreditFor the year ended December 31, 2019, WQA Company reported opening retained earnings of P1,850,000 and cumulative unrealized gains recorded as reserves of P25,000. These gains are from an investment with an original cost of P100,000 and a fair value of P125,000. The company policy is to value all investments at fair value with unrealized gains and losses included in reserves. The company's accounting policy is that when an investment is sold, the reserve amount is transferred to retained earnings. During 2020, one-half of the investment was sold. The remaining investment increased in value to P70,000. A second investment was bought for P150,000 and its fair value had increased to P165,000 by the end of 2020. What is the reserve balance at December 31, 2020?A company invests in stock of other companies for trading purposes. Its accounting year ends December 31. Its investment activity during 2019, 2020, and 2021 is as follows: a. Purchased stock of Acme Company in 2019 for $250,000 for the purpose of taking advantage of short-term volatility in the market place. ). Sold the investment shortly after purchase for $235,000. :. Purchased stock of Beeber Company in 2019 for $300,000. 1. The investment had a fair value of $275,000 at the end of 2019. e. It was sold for $310,000 in late 2020. f. Purchased stock of Cromwell Company in 2019 for $500,000. J. Its fair value and the end of 2019 was $520,000. 1. Its fair value and the end of 2020 $460,000. i. The investment was sold for $480,000 in 2021. Prepare the entries necessary to report the above entries in either a T-account or spreadsheet format.
- ABC Co. acquired equity securities on May 25, 2020. The acquisition did not result in significant influence over the investee company. The fair value of the investment at December 31, 2020 was $76,000 and $108,000 at December 31, 2021.The adjustment to the Fair Value Adjustment account at December 31, 2021 would be? a. $8,000 debit. b. $32,000 debit. c. $32,000 credit. d. $8,000 credit.As of 12/31/2020 Bank of America had Stockholders Equity on their Balance Sheet at $216,324 Milllion; the market capitalization of B of A at year end was $214,324. Is B of A required to write-down their book value to fair value? What authoritative literature addresses this topic? Provide FASB codification.For the next (2) two questions: DEF, Inc. had the following portfolio of financial assets as of December 31, 2021 before any year-end fair value adjustments: Investment Ben Corp. stocks (20,000 shares) Chris, Inc. stocks (40,000 shares) Balance P605,000 1,100,000 The shares of Ben Corp. were acquired on February 20, 2021 with an intention of generating short- term profits from the share price's fluctuations. The company paid P30.25 per share, which includes P1.25 per share broker's fees and commissions. A P2 per share cash dividends were received on March 30. These dividends were declared by Ben Corp. on January 20, 2021 to stockholders as of record date March 1, 2021. The shares of Ben Corp. are trading at P30/share at year-end. The company paid P27.50 per share, including P0.50 per share broker's fees and commissions on the acquisition of Chris, Inc.'s stocks on March 1, 2021 for trading purposes. A P3 per share dividends were received from the said shares on May 3, 2021. The…
- The following information is available for Sheridan Company at December 31, 2020, regarding its investments. Securities Cost Fair Value 2,600 shares of Myers Corporation Common Stock $ 36,900 $ 46,200 1,200 shares of Cole Incorporated Preferred Stock 23,600 21,100 $ 60,500 $ 67,300 (a) Prepare the adjusting entry (if any) for 2020, assuming no balance in the Fair Value Adjustment account at January 1, 2020. Neither of Sheridan’s investments result in significant influence. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit CreditPresented below is information related to the purchases of common stock by Cheyenne Company during 2020. Cost(at purchase date) Fair Value(at December 31) Investment in Arroyo Company stock $97,000 $76,000 Investment in Lee Corporation stock 266,000 311,000 Investment in Woods Inc. stock 176,000 185,000 Total $539,000 $572,000 (Assume a zero balance for any Fair Value Adjustment account.) (a) What entry would Cheyenne make at December 31, 2020, to record the investment in Arroyo Company stock if it chooses to report this security using the fair value option? (b) What entry would Cheyenne make at December 31, 2020, to record the investments in the Lee and Woods corporations, assuming that Cheyenne did not select the fair value option for these investments? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0…Midwest Bank invests in equity securities. At the beginning of December 2019, the bank held no equity securities. During December of 2019, it entered into the following transactions: Dec. 10 Purchased 500 shares of Carroll Company common stock for $76 per share. Dec. 21 Purchased 800 shares of Dynamo Company common stock for $34 per share. At the end of December, the Carroll Company common stock had a quoted market price of $79 per share, and the Dynamo Company common stock had a quoted market price of $33 per share. a. Prepare journal entries to record the December 2019 transactions. b. Show how the bank reports the equity securities on its December 31, 2019, balance sheet.
