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In: Accounting

On December 31, 2015, Valur Co. had the following available-for-sale investment disclosure within the Current Assets...

On December 31, 2015, Valur Co. had the following available-for-sale investment disclosure within the Current Assets section of the balance sheet: 1 Available-for-sale investments (at cost) $145,000.00 2 Plus valuation allowance for available-for-sale investments 40,000.00 3 Available-for-sale investments (at fair value) $185,000.00 There were no purchases or sales of available-for-sale investments during 2016. On December 31, 2016, the fair value of the available-for-sale investment portfolio was $200,000. The net income of Valur Co. was $210,000 for 2016. Compute the comprehensive income for Valur Co. for the year ended December 31, 2016. Refer to the Chart of Accounts and the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. If a net loss is incurred, enter that amount as a negative number using a minus sign.

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Expert Solution

On December 31, 2015

Available-for-sale investments (at cost)

145000

Add: valuation allowance for available-for-sale investments

40000

Available-for-sale investments (at fair value)

185000

On December 31, 2016, the

Fair value of the available-for-sale investment portfolio

200000

Available-for-sale investments (at fair value) On December 31, 2015

-185000

Increase in fair value of investment of available of sales security

15000

Journal entries

Date

Account title

Debit

Credit

December 31, 2016

Available-for-sale investments ( for this question, valuation allowance for available-for-sale investments)

15000

Unrealized gain available-for-sale investments

15000

(To record increase in fair value of investment of available of sales security.)

Changes in the value of available-for-sale securities are recorded as an unrealized gain or loss in other comprehensive income (OCI).

Valur Co.

Comprehensive income

For the year ended December 31, 2016

Net income

210000

Unrealized gain available-for-sale investments (at beginning)

40000

Add: unrealized gain available-for-sale investments during the year

15000

Unrealized gain available-for-sale investments (at ending)

55000

Comprehensive income

265000

ekkarill92 answered 2 years ago
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