Second National Insurance Company provided this Information for its minority-passive equity securities: Fair Value 12/31/X1 12/31/X2 $60,000 $55,000 25,000 13,000* 25,000 12,000 Security Company A Common Company B Common Company C Preferred Company D Common *Second National sold 50% of the Company B common shares for $14,000 on July 1, 20X2. Fair value at December 31, 20X2 is for the Company B shares remaining in the trading portfolio. Required: No 1. Provide the journal entries to record the fair value adjustment on December 31, 20X1. Assume that Second National uses an account entitled Fair value adjustment-minority-passive equity securities to adjust the cost of the portfolio to year-end fair values. 2. Provide the entry to record the sale of Company B's common shares on July 1, 20X2. Assume that the last fair value adjustment for these shares was on December 31, 20X1. 3. Provide the journal entry and supporting calculations for the fair value adjustment on December 31, 20x2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 1 2 3 Transaction 01 Date Acquired 1/15/X1 6/38/x1 2/1/X2 5/1/X2 02 Acquisition Cost $50,000 30,000 20,000 10,000 03 Answer is not complete. General Journal Fair value adjustment - trading securities Unrealized holding gain on trading securities Cash Fair value adjustment - trading securities Trading securities - Company B common stock Fair value adjustment - trading securities Unrealized holding gain on trading securities >> > Debit 5,000 14,000 2,500 Credit 5,000 1,500 12,500 2,500
Second National Insurance Company provided this Information for its minority-passive equity securities: Fair Value 12/31/X1 12/31/X2 $60,000 $55,000 25,000 13,000* 25,000 12,000 Security Company A Common Company B Common Company C Preferred Company D Common *Second National sold 50% of the Company B common shares for $14,000 on July 1, 20X2. Fair value at December 31, 20X2 is for the Company B shares remaining in the trading portfolio. Required: No 1. Provide the journal entries to record the fair value adjustment on December 31, 20X1. Assume that Second National uses an account entitled Fair value adjustment-minority-passive equity securities to adjust the cost of the portfolio to year-end fair values. 2. Provide the entry to record the sale of Company B's common shares on July 1, 20X2. Assume that the last fair value adjustment for these shares was on December 31, 20X1. 3. Provide the journal entry and supporting calculations for the fair value adjustment on December 31, 20x2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 1 2 3 Transaction 01 Date Acquired 1/15/X1 6/38/x1 2/1/X2 5/1/X2 02 Acquisition Cost $50,000 30,000 20,000 10,000 03 Answer is not complete. General Journal Fair value adjustment - trading securities Unrealized holding gain on trading securities Cash Fair value adjustment - trading securities Trading securities - Company B common stock Fair value adjustment - trading securities Unrealized holding gain on trading securities >> > Debit 5,000 14,000 2,500 Credit 5,000 1,500 12,500 2,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Gadubhai
Transcribed Image Text:Second National Insurance Company provided this Information for its minority-passive equity securities:
Security
Company A Common
Company B Common
Company C Preferred
Company D Common
No
1
2
3
Transaction
01
*Second National sold 50% of the Company B common shares for $14,000 on July 1, 20X2. Fair value at December 31, 20X2 is for the
Company B shares remaining in the trading portfolio.
Required:
1. Provide the journal entries to record the fair value adjustment on December 31, 20X1. Assume that Second National uses an account
entitled Fair value adjustment-minority-passive equity securities to adjust the cost of the portfolio to year-end fair values.
2. Provide the entry to record the sale of Company B's common shares on July 1, 20X2. Assume that the last fair value adjustment for
these shares was on December 31, 20X1.
3. Provide the journal entry and supporting calculations for the fair value adjustment on December 31, 20x2.
(If no entry is required for a transaction/event, select "No Journal entry required" In the first account fleld.)
02
Date Acquired
1/15/X1
6/30/X1
2/1/X2
5/1/X2
03
Acquisition Cost
$50,000
30,000
20,000
10,000
Answer is not complete.
General Journal
Fair value adjustment - trading securities
Unrealized holding gain on trading securities
Cash
Fair value adjustment - trading securities
Trading securities - Company B common stock
Fair Value
12/31/X1 12/31/X2
$60,000
$55,000
25,000
Fair value adjustment - trading securities
Unrealized holding gain on trading securities
3
13,000*
>>
25,000
12,000
Debit
5,000
14,000
2,500
Credit
5,000
1,500
12,500
2,500
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