Chapter 15, Problem 5BPSB

Problem 15-5B

Long-term investment transactions; unrealized and realized gains and losses

C2 P3P4

Troyer’s long-term available-for--sale portfolio at December 31, 2016, consists of the following.

Troyer enters into the following long-term investment transactions during year 2017.

Jan. Sold 2,125 shares of Company S stock for $72,250 less a brokerage fee of $1,195.

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Mar. Purchased 15,500 shares of Company U common stock for $282,875 plus a brokerage fee of $1,980. The shares represent a 62% ownership 24 interest in Company U.

Apr. 5 Purchased 42,500 shares of Company V common stock for $133,875 plus a brokerage fee of $1,125. The shares represent a 10% ownership in Company V.

Sep. 2 Sold 11,000 shares of Company T common stock for $156,750 less a brokerage fee of $2,700.

Sep. Purchased 2,500 shares of Company W common stock for $50,500 plus a brokerage fee of $i,o5o. The shares represent a 25% ownership

27 interest in Company W.

Oct. Purchased 5,000 shares of Company X common stock for $48,750 plus a brokerage fee of $1,170. The shares represent a 13% ownership interest

30 in Company X.

The fair values of its investments at December 31, 2017, are: R, $568,125; S, $210,375; U, $272,800; V, $134,938; W, $54,689; and X, $45,625.

Required

1. Determine the amount Troyer should report on its December 31, 2017, balance sheet for its long-term investments in available-for-sale securities.

2. Prepare any necessary December 31, 2017, adjusting entry to record the fair value adjustment of the long-tenn investments in available-for-sale

securities.

3. What amount of gains or losses on transactions relating to long-term investments in available-for-sale securities should Troyer report on its December

31, 2017, income statement?

Check (2) Dr, Unrealized Loss-Equity, $16.267: Cr. Fair Value Adjustment-AFS (IJ), $46.580