The investments of Harlon Enterprises included the following cost and fair value amounts:($ in millions)Fair Value, Dec. 31Securities Available-for-Sale2016Cost2017A Corporation sharesB Corporation bondsC Corporation shares$ 20$14na$ 3735351514naD Industries shares504645Totals$115$95$101Harlon Enterprises sold its holdings of A Corporation shares on June 1, 2017, for $15 million. On September 12,2017, it purchased the C Corporation shares.Required:1. What is the effect of the sale of the A Corporation shares and the purchase of the C Corporation shares onHarlon's 2017 pretax earnings?2. At what amount should Harlon's securities available-for-sale portfolio be reported in its 2017 balance sheet?What adjusting entry is needed to accomplish this? What is the effect of the adjustment on Harlon's 2017 pre-tax earnings?

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Answered: The investments of Harlon Enterprises…

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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On November 1, 2015, Journeyman, LLC purchased 900 of the $1,000 face value, 9% bonds of Celebration Incorporated, for $948,000, including accrued interest of $13,500. The bonds matured on January 1, 2017, and interest was paid on March 1 and September 1. If Journeyman uses the straight-line method of amortization and the bonds are classified as available-for-sale, how should the net carrying value of the bonds be shown on Journeyman’s December 31, 2015 balance sheet?
Subject: acounting
Lover Company reported the following non-trading equity securities held as FA at FVOCI in its December 31, 2015 statement of financial position: Broken Company ordinary shares, at cost 2,000,000 Allowance for market adjustment for unrealized loss (300,000) Market value 1,700,000 On December 31, 2016, the market value of Lover’s investment is P1,950,000. As a result of the change in market value, Lover’s statement of comprehensive income for 2016 should report What is the gain on sale in 2017 if the securities are sold at 2,500,000?
Tanner-UNF Corporation acquired as a long-term investment $180 million of 7.0% bonds, dated July 1, on July 1, 2024. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 9% for bonds of similar risk and maturity. Tanner-UNF paid $160.0 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $160.0 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2024 and interest on December 31, 2024, a the effective (market) rate. 3. At what amount will Tanner-UNF report its investment in the December 31, 2024, balance sheet? 4. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2025, for $130.0 million. Prepare the journal entry to record the sale.…
On December 31, 2024, Oriole Company purchased debt securities as trading securities. Pertinent data are as follows: Fair Value Security Cost At 12/31/25 A $128400 $114500 B 167500 182400 C 284400 258500 On December 31, 2025, Oriole transferred its investment in security Ċ from trading to available-for-sale because Oriole intends to retain security C as a long-term investment. What total amount of gain or loss on its securities should be reported in Oriole's income statement for the year ended December 31, 2025? O $24900 loss O $1000 gain O $25900 loss O $39800 loss
Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $210 million. Required: 1. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2025, for $190 million. Prepare the journal entry to record the sale.
Loreal-American Corporation purchased several marketable securities during 2021. At December 31, 2021, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2020, and all are considered securities available-for-sale. Unrealized Holding Gain (Loss) Cost Fair Value Short term: Blair, Inc. ANC Corporation $ 484,000 452,000 $ 403,000 484,000 $(81,000) 32,000 Totals $ 936,000 $ 887,000 $(49,000) Long term: Drake Corporation $ 484,000 718,000 $ 562,000 $ 78,000 (56,000) $ 22,000 Aaron Industries 662,000 Totals $1,202,000 $1,224,000 Required: 1. Prepare appropriate adjusting entries at December 31, 2021. 2. What amount would be reported in the income statement at December 31, 2021, as a result of the adjusting entry? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 What amount would be reported in the income statement at December 31, 2021, as a result of…
Blue Company purchased, on January 1, 2017, as a held-to-maturity investment, $77,000 of the 9%, 5-year bonds of Chester Corporation for $71,309, which provides an 11% return.Prepare Blue’s journal entries for (a) the purchase of the investment, and (b) the receipt of annual interest and discount amortization. Assume effective-interest amortization is used. (Round answers to 0 decimal places, e.g. 1,225. 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 Debit Credit
Loreal-American Corporation purchased several marketable securities during 2024. At December 31, 2024, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2023, and all are considered securities available-for-sale. Short term: Blair, Incorporated ANC Corporation Totals Long term: Drake Corporation Aaron Industries Totals Required 1 Required 2 Cost $ 516,000 468,000 $984,000 View transaction list Fair Value 1 " $ 387,000 516,000 $ 903,000 $ 516,000 702,000 $ 578,000 678,000 $ 1,218,000 $ 1,256,000 Journal entry worksheet Required: 1. Prepare appropriate adjusting entry at December 31, 2024. 2. What amount would be reported in the income statement at December 31, 2024, as a result of the adjusting entry? Complete this question by entering your answers in the tabs below. Unrealized Holding Gain (Loss) $ (129,000) 48,000 $ (81,000) Prepare appropriate adjusting entry at December 31, 2024. Note: If no entry is required for a…
es Tanner-UNF Corporation acquired as a long-term Investment $170 million of 6% bonds, dated July 1, on July 1, 2024. Company management has the positive Intent and ability to hold the bonds until maturity, but when the bonds were acquired, Tanner-UNF decided to elect the fair value option for accounting for Its Investment. The market Interest rate (yleld) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $140 million for the bonds. The company will receive Interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $150 million. Required: 1. How would this Investment be classified on Tanner-UNF's balance sheet? 2. to 4. Prepare the journal entry to record Tanner-UNF's Investment in the bonds on July 1, 2024, Interest on December 31, 2024, at the effective (market) rate, and fair value changes as of December 31, 2024. 5. At what amount will Tanner-UNF report Its Investment in the…
The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2021. The company buys debt securities, not intending to profit from short-term differences in price and not necessarily to hold debt securities to maturity, but to have them available for sale in years when circumstances warrant. Ornamental’s fiscal year ends on December 31 No investments were held by Ornamental on December 31, 2020. Mar. 31 Acquired 8% Distribution Transformers Corporation bonds costing $480,000 at face value. Sep. 1 Acquired $1,020,000 of American Instruments’ 10% bonds at face value. Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds. Oct. 2 sold the Distribution Transformers bonds for $513,000. Nov. 1 Purchase $1,480,000 of M&D Corporation 6% bonds at face value. Dec. 31 Recorded any necessary adjusting entry (s) relating to the investments. The market prices of the investments are American Instruments bonds…
alain Company purchased $800,000 of 8% bonds of alain Corporation on January 1, 2015, at a discount, paying $ 738,2242. The bonds mature January 1, 2020, and yield 10%; interest is payable each July 1 and January 1. Assume that Robinson Company sells its investment on November 1, 2018, at 90 plus accrued interest. a) Robinson records this discount amortization as follows: b) Computation Gain/Loss on Sale of Bonds and Journal entry.

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