Chapter AE, Problem AE.2P

(a)

To determine

Stock Investments: Investment in a corporations’ capital stock is known as stock investment that gives the right of ownership to an investor equal to the amount invested in the company. Thus, it enables a stockholder to claim in the profits and the assets of the company.

Debt investment: Debt investments refer to the investments made in debt instrument by the investor at a predetermined interest and maturity period. Examples of debt investments are corporate bonds, government bonds, certificate of deposits.

To Record: The transactions and post to the accounts Debt Investments and Stock Investments.

(b)

To determine

To Prepare: The adjusting entry to report the investments at fair value at December 31, 2014.

(c)

To determine

To Prepare: The investments section of balance sheet of Company W.

(d)

To determine

To Identify: The income statement accounts and present the statement classification of each account.