On January 1, 2020, A Corp. had the following investments: Classification Investment Market Value Maturity Value Cost Trading K Inc. bonds $1,900 $1,800 Trading S Co. bonds 3,100 3,000 Held-to- maturity G Inc. bonds (due $10,000 9,700 12/31/2022) During the year, A Corp. acquired M Co. bonds for $1,000 and classified it as trading. At year-end, the M Co. bonds have fair market value of $1,200. The K Inc. investment on December 31 had a fair market value of $2,500. The S Co. investment had a December 31 market value of $3,500, and the G Inc. bonds had a December 31 market value of $9,850. Required: Indicate the balance sheet classification and where unrealized holding gains/losses would appear on the December 31, 2020 financial statements for each investment. Classification Current Assets: Trading Securities (at fair value) Long-term Investments: Held-to-maturity (amortized cost) Balance Sheet Valuation Sfill in the blank 2

On January 1, 2020, A Corp. had the following investments: Classification Investment Market Value Maturity Value Cost Trading K Inc. bonds $1,900 $1,800 Trading S Co. bonds 3,100 3,000 Held-to- maturity G Inc. bonds (due $10,000 9,700 12/31/2022) During the year, A Corp. acquired M Co. bonds for $1,000 and classified it as trading. At year-end, the M Co. bonds have fair market value of $1,200. The K Inc. investment on December 31 had a fair market value of $2,500. The S Co. investment had a December 31 market value of $3,500, and the G Inc. bonds had a December 31 market value of $9,850. Required: Indicate the balance sheet classification and where unrealized holding gains/losses would appear on the December 31, 2020 financial statements for each investment. Classification Current Assets: Trading Securities (at fair value) Long-term Investments: Held-to-maturity (amortized cost) Balance Sheet Valuation Sfill in the blank 2

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 1MC

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During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 loss
Refer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith Corporation bonds has a market value of 12,500. Prepare the year-end journal entry to record the unrealized gain or loss.
Refer to the information in RE13-5. Assume that on June 30, Aggie received interest on the Smith Corporation bonds. Prepare the June 30 journal entries to record the receipt of the interest. On April 30, 2019, Aggie Corporation purchased Smith Corporation 10%, 5-years bonds with a face value of 12,000 at par plus four months of accrued interest. Prepare the April 30 journal entry to record the purchase of these available-for-sale securities.
Waseca Company had 5 convertible securities outstanding during all of 2019. It paid the appropriate interest (and amortized any related premium or discount using the straight line method) and dividends on each security during 2019. Each of the convertible securities is described in the following table: Additional data: Net income for 2019 totaled 119,460. The weighted average number of common shares outstanding during 2019 was 40,000 shares. No share options or warrants arc outstanding. The effective corporate income tax rate is 30%. Required: 1. Prepare a schedule that lists the impact of the assumed conversion of each convertible security on diluted earnings per share. 2. Prepare a ranking of the order in which each of the convertible securities should be included in diluted earnings per share. 3. Compute basic earnings per share. 4. Compute diluted earnings per share. 5. Indicate the amount(s) of the earnings per share that Waseca would report on its 2019 income statement.
Transfer between Categories On December 31, 2018, Leslie Company held an investment in bonds of Kaufmann Company which it categorized as being held to maturity. At that time, the 8%, 100,000 face value bonds had a carrying value of 107,023.56 and were being amortized using the effective interest method based on a market rate of 7%. Interest on these bonds is paid annually each December 31. On December 31, 2019, after recording the interest earned, Leslie decided to reclassify the Kaufmann bonds to its available-for-sale category in anticipation of a major restructuring. At that time, the ending quoted market price for the bonds was 105,000. Required: Prepare the journal entries on December 31, 2019, to record the interest earned and the reclassification.
On August 1, 2025, Ivanhoe Company acquired 1220, $1000, 9% bonds at 97 plus accrued interest. The bonds were dated May 1, 2025, and mature on April 30, 2030, with interest paid each October 31 and April 30. The bonds will be added to Ivanhoe's available- for-sale portfolio. The entry to record the purchase of the bonds on August 1, 2025 is Debt Investments Interest Receivable Cash Debt Investments Cash 1183400 27450 Debt Investments Interest Revenue Cash 1210850 Debt Investments Interest Revenue Discount on Debt Investments Cash 1220000 27450 1183400 27450 1210850 1210850 36600 1210850 1210850
In 2021 and 2022, Norman Company had the following transactions related to investments in bonds.2021 Apr. 1 Purchased $400,000 of 8% bonds issued by JS, Inc. at face value. Interest is payable semiannually on September 30 and March 31. June 1Purchased $500,000 of 12% bonds issued by Okla Co. at face value. Interest is payable semiannually on November 30 and May 31. Sept. 30 Received semiannual interest payment from JS, Inc. Nov. 30 Received semiannual interest payment from Okla Co.Dec. 31 Recorded any necessary adjusting entries relating to the investments.
An investor company purchased $427,000 of 8% bonds from the investee company on January 1, 2020, with interest payable on December 31. The bonds were classified as Available-for-Sale. The bonds sold for $706,390. Using the effective-interest method, the investor company revised the Available-for-Sale Debt Securities account on December 31, 2020 and December 31, 2021 by the amortized discount/premium of $6,470. and $8,200, respectively. At December 31, 2020, the fair value of the investee company bonds was $912,000. At December 31, 2021, the fair value of the investee company bonds was $843,000. What is the amount of unrealized holding gain/loss related to this investment in 2021? (Very important: Just enter the amount. DO NOT put a plus or minus sign in front of the amount.)
On August 1, 2021, Crane Company acquired 1310, $1000, 9% bonds at 97 plus accrued interest. The bonds were dated May 1, 2018, and mature on April 30, 2027, with interest paid each October 31 and April 30. The bonds will be added to Crane’s available-for-sale portfolio. The preferred entry to record the purchase of the bonds on August 1, 2021 isa. Debt Investments 1310000 Interest Revenue 29475 Discount on Debt Investments 39300 Cash 1300175 b. Debt Investments 1300175 Cash 1300175 c. Debt Investments 1270700 Interest Receivable 29475 Cash 1300175 d. Debt Investments 1270700 Interest Revenue 29475 Cash 1300175
In 2019, Osgood Corporation purchased $8.5 million worth of 10-year municipal bonds at face value. On December 31, 2021, the bonds had a fair value of $2,800,000 and Osgood reclassified the bonds from held-to-maturity to trading securities. Osgood's December 31, 2021, balance sheet and the 2021 income statement would show the following: Investment inbonds (TS) Incomestatementloss oninvestments a. $ 2,800,000 $ 0 b. $ 2,800,000 $ 5,700,000 c. $ 8,500,000 $ 5,700,000 d. $ 8,500,000 $ 0 Option b. Option d. Option c. Option a.
On January 1, 2022, BTS Company purchased 3,000, P1,000 face value term bons with a stated rate of 10% as at amortized cost. The bonds pay interest annually on December 31 and will be redeemed entirely by the issuer on December 31, 2025. The bond investment was purchased for P2,819,100 at an effective rate of 12%.On December 31, 2023, the entity changes business model for managing its financial assets and this investment as reclassified as debt investments at fair value through profit or loss. On this date, the bonds are quoted at 101. What is the carrying value of the debt investment on December 31, 2023 prior to reclassification?
An investor company purchased $491,000 of 8% bonds from the investee company on January 1, 2020, with interest payable on December 31. The bonds were classified as Available-for-Sale. The bonds sold for $755,470. Using the effective-interest method, the investor company revised the Available-for-Sale Debt Securities account on December 31, 2020 by the amortized discount/premium of $6,910. At December 31, 2020, the fair value of the investee company bonds was $928,000. What is the amount of unrealized holding gain/loss related to this investment in 2020? (Very important: Just enter the amount. DO NOT put a plus or minus sign in front of the amount.)