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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 15-15 (Algo) Classifying Investments In securities; recording fair values LO C1, P2, P3, P4, P5 The following Information shows Carperk Company's Individual Investments in securities during its current year, along with the December 31 fair values. a. Investment In Brava Company bonds: $454,000 cost; $493,498 fair value. Carperk Intends to hold these bonds until they mature In 5 years. b. Investment In Baybridge common stock: 29,500 shares: $360,930 cost, $392.331 fair value. Carperk owns 32% of Baybridge's voting stock and has a significant Influence over Baybridge. c. Investment in Duffa bonds: $186,140 cost; $200,659 fair value. This Investment is not readily marketable and is not classified as held-to-maturity or trading. d. Investment In Newton notes: $103,512 cost: $101,752 fair value. Newton notes are not readily marketable and are not classified as held-to-maturity or trading. e. Investment In Farmers common stock: 16,300 shares; $113,500 cost: $120.537 fair value. This stock is marketable, and Carperk Intends to sell it within the year. This stock Investment results in Carperk having an insignificant influence over Farmers. Required: 1. Identify whether each Investment should be classified as a short-term or long-term investment. For each Investment, indicate in which of the six Investment classifications It should be placed. 2. Prepare ajournal entry dated December 31 to record the fair value adjustment for the portfolio of available-for-sale debt securities. Carperk had no available-for-sale debt securities prior to this year. Complete this question by entering your answers in the tabs below. Required 1 Required 2 sa short-term or long-term investment. For each investment indicate Identify whether each investment should be classified in which of the six investment classifications it should be placed.
Transcribed Image Text:Exercise 15-15 (Algo) Classifying Investments In securities; recording fair values LO C1, P2, P3, P4, P5 The following Information shows Carperk Company's Individual Investments in securities during its current year, along with the December 31 fair values. a. Investment In Brava Company bonds: $454,000 cost; $493,498 fair value. Carperk Intends to hold these bonds until they mature In 5 years. b. Investment In Baybridge common stock: 29,500 shares: $360,930 cost, $392.331 fair value. Carperk owns 32% of Baybridge's voting stock and has a significant Influence over Baybridge. c. Investment in Duffa bonds: $186,140 cost; $200,659 fair value. This Investment is not readily marketable and is not classified as held-to-maturity or trading. d. Investment In Newton notes: $103,512 cost: $101,752 fair value. Newton notes are not readily marketable and are not classified as held-to-maturity or trading. e. Investment In Farmers common stock: 16,300 shares; $113,500 cost: $120.537 fair value. This stock is marketable, and Carperk Intends to sell it within the year. This stock Investment results in Carperk having an insignificant influence over Farmers. Required: 1. Identify whether each Investment should be classified as a short-term or long-term investment. For each Investment, indicate in which of the six Investment classifications It should be placed. 2. Prepare ajournal entry dated December 31 to record the fair value adjustment for the portfolio of available-for-sale debt securities. Carperk had no available-for-sale debt securities prior to this year. Complete this question by entering your answers in the tabs below. Required 1 Required 2 sa short-term or long-term investment. For each investment indicate Identify whether each investment should be classified in which of the six investment classifications it should be placed.
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