Question

In: Accounting

Ticker Services began operations in 2015 and maintains long-term investments in available-for-sale securities. The year-end cost...

Ticker Services began operations in 2015 and maintains long-term investments in available-for-sale securities. The year-end cost and fair values for its portfolio of these investments follow.

Portfolio of Available-for-Sale Securities Cost Fair Value
December 31, 2015 $ 378,870 $ 367,504
December 31, 2016 431,912 457,827
December 31, 2017 587,400 694,894
December 31, 2018 886,974 789,407

Prepare journal entries to record each year-end fair value adjustment for these securities.

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Calculation

12/31/15 Existing balance in Fair Value Adjustment-AFS (LT)
Required balance in Fair Value Adjustment-AFS (LT)
Adjustment required to Fair Value Adjustment-AFS (LT)
12/31/16 Existing balance in Fair Value Adjustment-AFS (LT) 0
Required balance in Fair Value Adjustment-AFS (LT)
Adjustment required to Fair Value Adjustment-AFS (LT)
12/31/17 Existing balance in Fair Value Adjustment-AFS (LT) 0
Required balance in Fair Value Adjustment-AFS (LT)
Adjustment required to Fair Value Adjustment-AFS (LT)
12/31/18 Existing balance in Fair Value Adjustment-AFS (LT) 0
Required balance in Fair Value Adjustment-AFS (LT)
Adjustment required to Fair Value Adjustment-AFS (LT)

Record the year-end adjusting entry for the securities portfolio as of December 31, 2015, 2016, 2017, 2018

Solutions

Expert Solution

Solution :

31-Dec-15 Existing balance in Fair Value Adjustment-AFS (LT) $0.00
Required balance in Fair Value Adjustment-AFS (LT) ($367,504 - $378,870) -$11,366.00
Adjustment required to Fair Value Adjustment-AFS (LT) -$11,366.00
31-Dec-16 Existing balance in Fair Value Adjustment-AFS (LT) -$11,366.00
Required balance in Fair Value Adjustment-AFS (LT) ($457,827 - $431,912) $25,915.00
Adjustment required to Fair Value Adjustment-AFS (LT) $37,281.00
31-Dec-17 Existing balance in Fair Value Adjustment-AFS (LT) $25,915.00
Required balance in Fair Value Adjustment-AFS (LT) ($694,894 - $587,400) $107,494.00
Adjustment required to Fair Value Adjustment-AFS (LT) $81,579.00
31-Dec-18 Existing balance in Fair Value Adjustment-AFS (LT) $107,494.00
Required balance in Fair Value Adjustment-AFS (LT) ($789,407 - $886,974) -$97,567.00
Adjustment required to Fair Value Adjustment-AFS (LT) -$205,061.00
Journal Entries - Ticker Services
Date Particulars Debit Credit
31-Dec-15 Unrealised holding gain or loss - OCI Dr $11,366.00
       To Fair value adjustment - AFS (LT) $11,366.00
(To record fair value adjustment for available for sale securities)
31-Dec-16 Fair value adjustment - AFS (LT) Dr $37,281.00
       To Unrealised holding gain or loss - OCI $37,281.00
(To record fair value adjustment for available for sale securities)
31-Dec-17 Fair value adjustment - AFS (LT) Dr $81,579.00
       To Unrealised holding gain or loss - OCI $81,579.00
(To record fair value adjustment for available for sale securities)
31-Dec-18 Unrealised holding gain or loss - OCI Dr $205,061.00
       To Fair value adjustment - AFS (LT) $205,061.00
(To record fair value adjustment for available for sale securities)

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