Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 16, Problem 16.4E
a.
To determine
The journal entry to record the acquisition of investments.
b.
To determine
To prepare: The journal entry to record the end of Year 1 fair value adjustment.
c.
To determine
To prepare: The journal entry to record the sale.
d.
To determine
To prepare: The journal entry to record the end of Year 2 fair value adjustment.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Armadillo Enterprises acquired the following equity investmentsat the beginning of year 1 as trading investments.
Description
Number of shares
Market price per share
Total price
Finestra Company
15,000
x $25
$387,500
BVD Company
20,000
X$18
$360,000
Market values at theend of Years 1 &2 are presented
below:
Market/Fair Value
End of year 1
End of year 2
Finestra Company
$19
$23
BVD Company
|$22
$28
REQUIREMENTS:
Prepare the journal entry to record the acquisition of
theinvestments.
Prepare the adjusting journal entry required at the end of year1.
Armadillo Enterprises sells 15,000 shares of BVD Company for $16at the beginning of year 2. Prepare the journal entry to record thesale.
Prepare the adjusting journal entry required at the end of year2.
Assume that ArmadilloEnterprises now holds these investments asavailable-for-sale.
Prepare the journal entry to record the acquisition of theinvestments.
Prepare the adjusting journal entry required at the end of year1.
Armadillo Enterprises…
How much is the unrealized gain (loss) recognized in other comprehensive
income on December 31, 20x1?
Karen Co. purchased the following equity securities on January 1, 20x1 for a total amount of
P360,000.
Cost
Alaska Co. preference shares
P200,000
160,000
Valdez Co. ordinary shares
Totals
P360,000
The shares did not qualify for recognition as held for trading, thus they were classified as
investment in equity securities measured at fair value through other comprehensive income.
On December 31, 20x1, the portfolio of Karen Co. comprised the following.
Fair value - 12/31/x1
Alaska Co. preference shares
P240,000
60,000
Valdez Co. ordinary shares
Total
P300,000
On December 31, 20x2, the portfolio of Karen Co. comprised the following:
Fair value-12/31/x2
Alaska Co. preference shares
P220,000
Valdez Co. ordinary shares
180,000
Total
P400,000
On February 2, 20x3, all of the Alaska Co. preference shares were sold for P160,000 net of transaction
costs.
60,000
100,000
O (60,000)
Please help me to solve this problem
Chapter 16 Solutions
Intermediate Accounting (2nd Edition)
Ch. 16 - Prob. 16.1QCh. 16 - Is reporting an investment at its cost considered...Ch. 16 - Prob. 16.3QCh. 16 - Prob. 16.4QCh. 16 - Prob. 16.5QCh. 16 - Prob. 16.6QCh. 16 - What categories can managers use to classify...Ch. 16 - When is the equity method of accounting for...Ch. 16 - Prob. 16.9QCh. 16 - Can companies apply the fair value option to all...
Ch. 16 - What is the fair value hierarchy for investment...Ch. 16 - Prob. 16.12QCh. 16 - Prob. 16.13QCh. 16 - Prob. 16.14QCh. 16 - Prob. 16.15QCh. 16 - Prob. 16.16QCh. 16 - Prob. 16.17QCh. 16 - Deutsch Imports has three securities in its...Ch. 16 - Prob. 16.2MCCh. 16 - Prob. 16.3MCCh. 16 - Prob. 16.4MCCh. 16 - Prob. 16.5MCCh. 16 - Prob. 16.6MCCh. 16 - Prob. 16.7MCCh. 16 - Prob. 16.1BECh. 16 - Prob. 16.2BECh. 16 - Debt Investments, Trading. Using the information...Ch. 16 - Prob. 16.4BECh. 16 - Prob. 16.5BECh. 16 - Prob. 16.6BECh. 16 - Prob. 16.7BECh. 16 - Prob. 16.8BECh. 16 - Prob. 16.9BECh. 16 - Prob. 16.10BECh. 16 - Prob. 16.11BECh. 16 - Prob. 16.12BECh. 16 - Prob. 16.13BECh. 16 - Notes Receivable. Aaron Anatole accepted a...Ch. 16 - Prob. 16.15BECh. 16 - Prob. 16.16BECh. 16 - Prob. 16.17BECh. 16 - Debt Investments. Impairments. IFRS. For each debt...Ch. 16 - Prob. 16.19BECh. 16 - Prob. 16.1ECh. 16 - Prob. 16.2ECh. 16 - Prob. 16.3ECh. 16 - Prob. 16.4ECh. 16 - Prob. 16.5ECh. 16 - Prob. 16.6ECh. 16 - Prob. 16.7ECh. 16 - Debt and Equity Investments, Available-for-Sale...Ch. 16 - Prob. 16.9ECh. 16 - Equity Investments without a Readily Determinable...Ch. 16 - Prob. 16.11ECh. 16 - Prob. 16.12ECh. 16 - Prob. 16.13ECh. 16 - Equity-Investments, Equity Method. Book Value of...Ch. 16 - Prob. 16.15ECh. 16 - Prob. 16.16ECh. 16 - Notes Receivable. Each of the following three...Ch. 16 - Notes Receivable. On January 1, 2018, Racine...Ch. 16 - Debt Investment, Held to Maturity, Impairments....Ch. 16 - Debt Investment, Impairments, IFRS. Repeat E16-19...Ch. 16 - Prob. 16.21ECh. 16 - Prob. 16.22ECh. 16 - Prob. 16.23ECh. 16 - Prob. 16.24ECh. 16 - Prob. 16.25ECh. 16 - Prob. 16.1PCh. 16 - Debt Investments, Trading. Freder Software Group...Ch. 16 - Prob. 16.3PCh. 16 - Equity Investments, Readily Determinable Fair...Ch. 16 - Prob. 16.5PCh. 16 - Prob. 16.6PCh. 16 - Prob. 16.7PCh. 16 - Prob. 16.8PCh. 16 - Prob. 16.9PCh. 16 - Prob. 16.10PCh. 16 - Prob. 16.11PCh. 16 - Equity Investments, Equity Method, Fair Value...Ch. 16 - Prob. 16.13PCh. 16 - Prob. 16.14PCh. 16 - Prob. 16.15PCh. 16 - Prob. 16.16PCh. 16 - Prob. 16.17PCh. 16 - Prob. 16.18PCh. 16 - Prob. 16.19PCh. 16 - Prob. 1JCCh. 16 - Prob. 2JCCh. 16 - Prob. 1SSCCh. 16 - Prob. 1BCCCh. 16 - Prob. 2BCC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Investments in Stocks - This portfolio is composed of GKKB Company shares (GanyanKabaKatigasBash) and ABC Company shares. The shares were not held for trading and management has elected to designate the investments at fair value through other comprehensive income. Date Account Debit Credit May 3, 2020 Investment in GKKB Company 25,250 Broker's fee 1,000 Cash 26,250 To record the acquisition of GKKB shares and its related transaction cost Investment in ABC Company 32,450 Cash 32,450 To record the acquisition of ABC shares, acquired at P32.45 per share December 31, 2020 Unrealized Gain / (Loss) on market changes 400 Investment in ABC Company 1,500 Investment in GKKB Company 1,900 To record the market value adjustment for 2020 May 28, 2021 Investment in ABC Company 5,000 Dividend income 5,000 Received 100 shares of ABC Company in lieu of cash dividends of P5…arrow_forwardInvestments in Stocks - This portfolio is composed of GKKB Company shares (GanyanKabaKatigasBash) and ABC Company shares. The shares were not held for trading and management has elected to designate the investments at fair value through other comprehensive income. Date Account Debit Credit May 3, 2020 Investment in GKKB Company 25,250 Broker's fee 1,000 Cash 26,250 To record the acquisition of GKKB shares and its related transaction cost Investment in ABC Company 32,450 Cash 32,450 To record the acquisition of ABC shares, acquired at P32.45 per share December 31, 2020 Unrealized Gain / (Loss) on market changes 400 Investment in ABC Company 1,500 Investment in GKKB Company 1,900 To record the market value adjustment for 2020 May 28, 2021 Investment in ABC Company 5,000 Dividend income 5,000…arrow_forwardNonearrow_forward
- I got the first two parts, but could you explain to me how to find part C?arrow_forwardCompany A buys 15% of common stocks of Company B. Company A provides financial support to Company B, which is unavailable to finance its activities. Company A should record its investment in Company B as: a. Available for sale investment b. Trading investment c. As Investment using the equity method d. As Investment preparing consolidated financial statementsarrow_forwardEquity securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses as part of the net income are: Securities where a company has holdings of between 20% and 50% Securities where a company has holding of less than 20% O Available-for-sale securities where a company has holdings of less than 20% O Securities where a company has holdings of more than 50%arrow_forward
- Following is a list of investments owned by Ivanhoe Ltd., as of the company’s year-end, December 31, 2020: Investment No. Shares Cost Fair Value HFX Corporation 1,000 $8.00 $7.10 FDY Ltd. 3,000 6.90 6.95 CTN Corporation 4,600 5.00 5.80 On January 15, 2021, Ivanhoe sold the shares in CTN Corporation for $6.25 per share. Prepare the journal entries required to record the sale, assuming the company uses the fair value through other comprehensive income without recycling method. (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.) Date Account Titles and Explanation Debit Credit Jan. 15, 2021 (To adjust to current fair value) (To record the sale of shares) (Reclassification…arrow_forwardEquity and Available-for-Sale Investments O'Brien Industries Inc. is a book publisher. The availlable-for-sale investments at cost and fair value on December 31, 20Y4, are as follows: Issuing Company Cost Fair Value Bernard Co. $16,000 $14,600 Chadwick Co. 31,500 29,500 $47,500 $44,100 The investment in Jolly Roger Co. stock represents 30% of the outstanding shares of Jolly Roger Co. The following selected transactions occurred during 20Y5: Jan. 2. Purchased $34,200 of Gozar Inc. 5%, 10-year bonds at 100. The bonds are classified as an vailable-for- sale investment. The bonds pay Interest'on June 30 and December 31. June Received interest for 6 months on the Gozar Inc. 30. bonds purchased on January 2. Oct, 1. Purchased $27,000 of Nightline Co. 5%, 10-year bonds at 100, The bonds are classified as an available-for-sale investment. The bonds pay interest on October 1 and April 1. Dividends of $7,900 are received on the Jolly Roger 9. Co, investment. Dec. 31. Jolly Roger Co. reported a…arrow_forwardSubject-accountingarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning