Question

The below transactions concerns Ford Company for the year 2012:

1. On May31^st,2012, Ford company purchased a long-term investment related to Motro Companyfor $12 millionas trading securities, of 8% quoted bonds. On the same date the business acquired $15million of Cora Company shares as available-for sale security and purchased Treasury bonds for $3 million, from Samsuc Company hoping to generate profit in short period of time.

2. On November 15^th, 2012, Ford company sold the Samsuc Treasury bonds for $4 million.

3. On December 31^st, 2012, record the necessary adjusting entry(s) and closing entries related to the investments. The market prices of the investments are:

Motro Company      $11.5 million

Cora Company          $16 million

Samsuc Company     $5 million

Required:

1. Record transaction number (3) presenting the necessary adjusting entries.
2. Indicate any amounts that Ford would report in its 2012 statement of financial position and income statement as result of these investments.

Answer 1

a.)				$ Million
	Date	Account Tiltes	Debit	Credit
	December 31,2012	Unrealized holding Gain or loss-OCI	0.50
		Bond Investment- Motro Company		0.50
		( 12 - 11.50 )
		( To record fair value adjustment )
	December 31,2012	Investment in Cora Company	1.00
		Unrealized holding Gain or loss-OCI		1.00
		( 16 - 15 )
		( To record fair value adjustment )

b.)	Statement of Financial Position
	Assets	$ Million
	Investment in Cora Company-At Fair Value	16.00
	( 15 + 1 )
	Bond Investment- Motro Company-At Fair Value	11.50
	( 12 - 0.5 )
	Income Statement	$ Million
	Gain on sale of Investment ( Samsuc Treasury Bond )-IS	1.00
	( 4 - 3 )
	Unrealized holding Gain or loss-OCI	0.50
	( 1 - 0.50 )