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.
Complete this question by entering your answers in the tabs below.
Calculation
|
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) | |||
ekkarill92 answered 2 years agoRelated Solutions
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
$
369,060
$
357,988
December 31, 2016
420,728
445,972
December 31, 2017
572,190
676,901
December 31, 2018
864,007
768,966
Prepare journal entries to record each year-end fair value
adjustment for these securities.
Calculation adjustment required to fair value adjustment.
12/31/15
Existing
balance in Fair...
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
$
347,460
$
337,036
December 31, 2016
396,104
419,870
December 31, 2017
538,701
637,283
December 31, 2018
813,439
723,961
Prepare journal entries to record each year-end fair value
adjustment for these securities.
Calculation adjustment required to fair value adjustment.
12/31/15
Existing balance in Fair...
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
$
363,640
$
352,731
December 31,
2016
414,550
439,423
December 31,
2017
563,788
666,961
December 31,
2018
851,320
757,675
Prepare journal entries to record each year-end fair value
adjustment for these securities.
Kitty Company began operations in 2016 and maintains short-term investments in trading securities. The year-end cost...
Kitty Company began operations in 2016 and maintains short-term
investments in trading securities. The year-end cost and fair
values for its portfolio of these investments follow.
Portfolio of Trading
Securities
Cost
Fair Value
December 31,
2016
$
73
$
53
December 31, 2017
60
82
December 31, 2018
78
105
December 31, 2019
92
73
Prepare journal entries to record each December 31 year-end fair
value adjustment for these above securities.
Mead Inc. began operations in Year 1, following is a series of transactions and events involving its long-term debt investments in available-for-sale securities.
Mead Inc. began operations in Year 1, following is a series of transactions and events involving its long-term debt investments in available-for-sale securities.
Year 1
Jan.
20
Purchased Johnson & Johnson bonds for $29,500.
Feb.
9
Purchased notes of Sony for $63,540.
June
12
Purchased bonds of Mattel for $49,500.
Dec.
31
Fair values for debt in the portfolio are Johnson & Johnson, $32,300; Sony, $55,750; and Mattel, $57,850.
Year 2...
Mead Inc. began operations in Year 1, following is a series of transactions and events involving its long-term debt investments in available-for-sale securities.
Mead Inc. began operations in Year 1, following is a series of transactions and events involving its long-term debt investments in available-for-sale securities.Year 1
Jan.
20
Purchased Johnson & Johnson bonds for $26,000.
Feb.
9
Purchased notes of Sony for $60,390.
June
12
Purchased bonds of Mattel for $46,000.
Dec.
31
Fair values for debt in the portfolio are Johnson & Johnson, $30,100; Sony, $49,650; and Mattel, $54,850.
Year 2
Apr....
1.If a company purchases its long term investments in available for sale debt securities this period...
1.If a company purchases its long term investments in available
for sale debt securities this period and their fair value is below
cost at the balance sheet date, what entry is required to recognize
the unrealized loss?
2. On a balance sheet, what valuation must be reported for debt
securities classified as available for sale?
3. Under what circumstances are long-term investments in debt
securities reported at cost and adjusted for amortization of any
difference between cost and maturity value?...
Stoll Co.’s long-term available-for-sale portfolio at December 31, 2016, consists of the following. Available-for-Sale Securities Cost...
Stoll Co.’s long-term available-for-sale portfolio at December
31, 2016, consists of the following.
Available-for-Sale
Securities
Cost
Fair Value
80,000 shares of Company A
common stock
$
1,070,600
$
980,000
14,000 shares of Company B
common stock
318,750
308,000
35,000 shares of Company C
common stock
1,325,500
1,281,875
Stoll enters into the following long-term investment
transactions during year 2017.
Jan.
29
Sold 7,000 shares of Company B
common stock for $158,375 less a brokerage fee of $3,100.
Apr.
17
Purchased 20,000...
Stoll Co.’s long-term available-for-sale portfolio at December 31, 2016, consists of the following. Available-for-Sale Securities Cost...
Stoll Co.’s long-term available-for-sale portfolio at December
31, 2016, consists of the following.
Available-for-Sale Securities
Cost
Fair Value
80,000 shares of Company A common stock
$
1,039,600
$
920,000
28,000 shares of Company B common stock
338,750
328,000
34,000 shares of Company C common stock
1,360,500
1,311,875
Stoll enters into the following long-term investment
transactions during year 2017.
Jan.
29
Sold 14,000 shares of Company B common stock for $168,375 less
a brokerage fee of $3,400.
Apr.
17
Purchased 21,000...
Stoll Co.’s long-term available-for-sale portfolio at December 31, 2016, consists of the following. Available-for-Sale Securities Cost...
Stoll Co.’s long-term available-for-sale portfolio at December
31, 2016, consists of the following. Available-for-Sale Securities
Cost Fair Value 70,000 shares of Company A common stock $ 1,046,600
$ 915,000 42,000 shares of Company B common stock 352,750 342,000
41,000 shares of Company C common stock 1,385,000 1,332,875 Stoll
enters into the following long-term investment transactions during
year 2017. Jan. 29 Sold 21,000 shares of Company B common stock for
$175,375 less a brokerage fee of $3,200. Apr. 17 Purchased 22,000...
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