Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Chapter 12, Problem 12.2BE
To determine
Trading securities: These are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.
To determine: The pre-tax amounts included in 2018 and 2019 net income
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Chapter 12 Solutions
Intermediate Accounting
Ch. 12 - All investments in debt securities are classified...Ch. 12 - When market rates of interest rise after a...Ch. 12 - Does GAAP distinguish between fair values that are...Ch. 12 - When a debt investment is acquired to be held for...Ch. 12 - Prob. 12.5QCh. 12 - What is comprehensive income? Its composition...Ch. 12 - Why are holding gains and losses treated...Ch. 12 - Prob. 12.8QCh. 12 - Prob. 12.9QCh. 12 - Prob. 12.10Q
Ch. 12 - Under IFRS No. 9, which reporting categories are...Ch. 12 - Prob. 12.12QCh. 12 - Do U.S. GAAP and IFRS differ in the amount of...Ch. 12 - Under what circumstances is the equity method used...Ch. 12 - The equity method has been referred to as a...Ch. 12 - In the application of the equity method, how...Ch. 12 - Prob. 12.17QCh. 12 - Prob. 12.18QCh. 12 - Prob. 12.19QCh. 12 - How does IFRS differ from U.S. GAAP with respect...Ch. 12 - What is the effect of a company electing the fair...Ch. 12 - Define a financial instrument. Provide three...Ch. 12 - Some financial instruments are called derivatives....Ch. 12 - (Based on Appendix 12A) Northwest Carburetor...Ch. 12 - Prob. 12.25QCh. 12 - Prob. 12.26QCh. 12 - (Based on Appendix 12B) Reporting an investment at...Ch. 12 - Prob. 12.28QCh. 12 - Explain how the CECL model (introduced in ASU No....Ch. 12 - Prob. 12.30QCh. 12 - Prob. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Trading securities LO12-3 For the Coca-Cola bonds...Ch. 12 - Available -for-sale securities LO12-4 SL...Ch. 12 - Available -for-sale securities LO12-4 For the...Ch. 12 - Prob. 12.6BECh. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Equity investments and dividends LO12-5 Turner...Ch. 12 - Prob. 12.12BECh. 12 - Prob. 12.13BECh. 12 - Equity method investments LO12-6, LO12-9 Kim...Ch. 12 - Change in principle; change to the equity method ...Ch. 12 - Fair value option; equity method investments ...Ch. 12 - Prob. 12.17BECh. 12 - Impairments (AFS Credit Loss Model) (Appendix 12B)...Ch. 12 - Prob. 12.19BECh. 12 - Prob. 12.20BECh. 12 - Prob. 12.1ECh. 12 - Prob. 12.2ECh. 12 - Securities held-to-maturity LO12-1 FFT...Ch. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Trading securities LO12-1 [This is a variation of...Ch. 12 - Various transactions relating to trading...Ch. 12 - Prob. 12.8ECh. 12 - Securities available-for-sale; adjusting entries ...Ch. 12 - Available -for-sale securities LO12-1, LO12-4...Ch. 12 - Available -for-sale securities LO12-1, LO12-4...Ch. 12 - Available -for-sale securities LO12-1, LO12-4...Ch. 12 - Classification of securities; adjusting entries ...Ch. 12 - Prob. 12.14ECh. 12 - Equity investments; fair value through net income ...Ch. 12 - Equity investments; fair value through net income ...Ch. 12 - Prob. 12.17ECh. 12 - Equity investments; fair value through net income ...Ch. 12 - Investment securities and equity method...Ch. 12 - Equity method; purchase; investee income;...Ch. 12 - Error corrections; equity method investment ...Ch. 12 - Prob. 12.22ECh. 12 - Prob. 12.23ECh. 12 - Prob. 12.24ECh. 12 - Prob. 12.25ECh. 12 - Prob. 12.26ECh. 12 - Prob. 12.27ECh. 12 - Prob. 12.28ECh. 12 - Prob. 12.29ECh. 12 - Prob. 12.30ECh. 12 - Prob. 12.31ECh. 12 - Prob. 12.32ECh. 12 - Accounting for impairments under IFRS (Appendix...Ch. 12 - Prob. 12.1PCh. 12 - Prob. 12.2PCh. 12 - Securities available-for-sale; bond investment;...Ch. 12 - Prob. 12.4PCh. 12 - Various transactions related to trading securities...Ch. 12 - Various transactions related to securities...Ch. 12 - Prob. 12.7PCh. 12 - Various transactions relating to trading...Ch. 12 - Securities held-to-maturity; securities available...Ch. 12 - Investment securities and equity method...Ch. 12 - Prob. 12.11PCh. 12 - Prob. 12.12PCh. 12 - Prob. 12.13PCh. 12 - Equity method LO12-6, LO12-7 On January 2, 2018,...Ch. 12 - Prob. 12.15PCh. 12 - Prob. 12.16PCh. 12 - Accounting for debt and equity investments ...Ch. 12 - Prob. 12.18PCh. 12 - Real World Case 121 Intels investments LO12-4 The...Ch. 12 - Prob. 12.2BYPCh. 12 - Prob. 12.4BYPCh. 12 - Prob. 12.6BYPCh. 12 - Real World Case 127 Comprehensive income Microsoft...Ch. 12 - Continuing Cases Target Case LO12-4, LO12-6...
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- Please send answer as the chartarrow_forwardBrief Exercise 12-5 (Static) Available-for-sale securities (LO12-4) S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2021, S&L purchased Coca-Cola bonds at par for $875,000 and sold the bonds on January 3, 2022, for $880,000. At December 31, the bonds had a fair volue of $873,000, and S&L has the intent and ability to hold the investment until fair value recovers. Prepare journal entries to record (a) any unrealized gains or losses occurring in 2021 and (b) the sale of the bonds in 2022, including recognition of any unrealized gains in 2022 prior to sale and reclassification of amounts out of OCI. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)arrow_forwardQUESTION 1 Bad Bookkeepers Inc. originally planned to issue $100,000 of 11% par bonds on January 1, 2027 with interest payable on June 30 and December 31. Due to some delays in the regulatory approval process the bonds are not issued (sold) until March 1, 2027. What was the total amount of cash that Big Bad Bookkeepers Inc. received from the sale of the bonds? Please do not use commas, $ or +/- in your answer.arrow_forward
- DONT GIVE ANSWER IN IMAGE FORMATarrow_forwardHh2.arrow_forwardAdjusting AFS Debt Securities to Fair Value A portfolio of investments of available-for-sale securities held by Dow Inc. is as follows. Dec. 31, 2020 Cost Fair Value Eastern Corp. bonds $204,000 $217,600 Western Corp. bonds 340,000 348,500 Total $544,000 $566,100 Dec. 31, 2021 Cost Fair Value Eastern Corp. bonds $204,000 $238,000 Western Corp. bonds 340,000 323,000 Total $544,000 $561,000 The Fair Value Adjustment account had a $0 balance on January 1, 2020. No sales or purchases took place in the available-for-sale investment portfolio in 2020 and 2021. a. Record the adjusting entry on December 31, 2020, to adjust the debt investments to fair value. Date Account Name Dr. Cr. Dec. 31, 2020 b. Record the adjusting entry on December 31, 2021, to adjust the debt investments to fair value. . Date Account Name Dr. Cr. Dec. 31, 2021 c. Indicate how the adjustment to fair value in (b) would be…arrow_forward
- Question: Akers Company invests its excess cash in marketable securities. At the beginning of 2019, it had the following portfolio of investments in trading debt securities: SecurityPar ValueAmortized Cost12/31/18 Fair ValueIvan Company 5% bonds, maturing on Dec. 31, 2028$10,000$8,400$9,400Taylor Company 6% bonds, maturing on Dec. 31, 2023$40,000$43,200$41,800Totals$51,600$51,200During 2019, the following transactions occurred: Mar. 31Purchased Hill Company 8% bonds with a face value of $20,000 for $20,000 plus accrued interest; interest is payable on the bonds each June 30 and December 31.Mar. 31Sold the Taylor Company investment for $42,000 plus accrued interest. The Taylor bonds pay interest on December 31 of each year.June 30Received the semiannual interest on the Hill Company bonds.Dec. 31Received the annual interest on the Ivan Company bonds and the semiannual interest on the Hill Company bonds.The December 31 closing market prices were as follows: Ivan Company bonds, $9,000;…arrow_forwardS&L Financial buys and sells securities expecting to earn profits on short-term differences in price. On December 27, 2018, S&L purchased Coca-Cola bonds at par for $875,000 and sold the bonds on January 3, 2019, for$880,000. At December 31, the bonds had a fair value of $873,000. What pretax amounts did S&L include in its2018 and 2019 net income as a result of this investment (ignoring interest)?arrow_forwardProblem 12 - 1 (Algo) Securities held - to - maturity; bond investment; effective interest; financial statement effects [LO12-1, 12-2] Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment S 200 million of 10% bonds, dated January 1, on January 1, 2024. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 12%. The price paid for the bonds was $178 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2024, was $190 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). 4. At what amount will Fuzzy Monkey report its investment in the December 31, 2024 balance sheet? 5. How would Fuzzy Monkey's 2024 statement of cash flows be affected by this investment? (If more than one approach is possible, indicate the…arrow_forward
- Prepare adjusting entry to record fair value, and indicate statement presentation. E16.11 (LO 3), AP Financial Statement Writing At December 31, 2022, available-for-sale debt securities for Storrer, Inc. are as follows. The securities are considered to be a long-term investment. Fair Value $16,000 14,000 21,000 $51,000 Security A B с Cost $17,500 12,500 23,000 $53,000 Instructions a. Prepare the adjusting entry at December 31, 2022, to report the securities at fair value. b. Show the statement presentation at December 31, 2022, after adjustment to fair value. c. E. Kretsinger, a member of the board of directors, does not understand the reporting of the unreal- ized gains or losses. Write a letter to Ms. Kretsinger explaining the reporting and the purposes that it serves.arrow_forwardDo not give solution in imagearrow_forwardDon't give answer in image formatarrow_forward
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