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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 a journal 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.

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 a journal 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.

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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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: $420,500 cost; $457,000 fair value. Carperk intends to hold these bonds until they mature in 5 years. b. Investment in Baybridge common stock: 29,500 shares; $362.450 cost; $391.375 fair value. Carperk owns 32% of Baybridge's voting stock and has a significant influence over Baybridge. c. Investment in Duffa bonds: $165,500 cost: $178.000 fair value. This investment is not readily marketable and is not classified as held-to-maturity or trading. d. Investment in Newton notes: $90,300 cost; $88,625 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; $100,860 cost; $111,210 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 a journal 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 Prepare a journal 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.
Transcribed Image Text: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: $420,500 cost; $457,000 fair value. Carperk intends to hold these bonds until they mature in 5 years. b. Investment in Baybridge common stock: 29,500 shares; $362.450 cost; $391.375 fair value. Carperk owns 32% of Baybridge's voting stock and has a significant influence over Baybridge. c. Investment in Duffa bonds: $165,500 cost: $178.000 fair value. This investment is not readily marketable and is not classified as held-to-maturity or trading. d. Investment in Newton notes: $90,300 cost; $88,625 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; $100,860 cost; $111,210 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 a journal 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 Prepare a journal 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.
kequired 1 "Requirea z Prepare a journal 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. View transaction list Journal entry worksheet 1 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. Note: Enter debits before credits. Date General Journal December 31 Fair value adjustment-Available-for-sale Unrealized gain-Equity Record entry Clear entry Debit 47,325 Credit 47,325 View general Journal
Transcribed Image Text:kequired 1 "Requirea z Prepare a journal 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. View transaction list Journal entry worksheet 1 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. Note: Enter debits before credits. Date General Journal December 31 Fair value adjustment-Available-for-sale Unrealized gain-Equity Record entry Clear entry Debit 47,325 Credit 47,325 View general Journal
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