Chapter A, Problem 3AP

1.

To determine

Indicate the method used to account the investment, and explain.

2.

a.

To determine

Journalize the purchase of investment in available-for-sale securities’ transaction for the years 2019 and 2020.

b.

To determine

Journalize the entry for income reported by investee companies for the years 2019 and 2020.

c.

To determine

Journalize the entry for receipt of dividend and interest revenue for the years 2019 and 2020.

d.

To determine

Journalize the adjusting entry for the changes in fair value for 2019 and 2020.

3.

a.

To determine

Show the reporting of long-term investments, on the balance sheet of Company P, on December 31, 2019 and 2020.

b.

To determine

Show the reporting of net unrealized gains (losses) related to investments, on the stockholders’ equity section of Company P, on December 31, 2019 and 2020.

c.

To determine

Show the revenue related to investments, reported on the income statement of Company P, on December 31.