Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 16, Problem 16.1MC
Deutsch Imports has three securities in its available-for-sale debt investment portfolio Information about these securities is as follows:
| Amortized Cost |
Market Value | ||
| Security | 12/31/Year 1 | 12/31/Year 2 | |
| NCB | $78,000 | $ 93,600 | $100,000 |
| TRR | $17,000 | $120,000 | 0 |
| Enson | $58,500 | $ 53,300 | $ 50,700 |
TRR was sold in Year 2 for $127,400
Which of the following statements is correct?
- I. On its 12/31/Year 2
balance sheet . Deutsch should report the NCB debt investment at its fair value of $100,000. - II. On its 12/31/Year 2 balance sheet Deutsch should report an unrealized holding gain on the NCB debt investment of $22,000 in
stockholders' equity. - III. On its income statement for the year ending December 31, year 2 Deutsch should report.
an unrealized holding gain on the NCB debt investment of $22,000
- a. I only is correct
- b. I and II only are correct
- c. I and III only are correct
- d. None of the listed answers is correct
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Stoll Company's long-term available-for-sale portfolio at the start of this year consists of the following.
Fair Value
$ 490,000
154,000
713,630
Available-for-Sale Securities
Company A bonds
Company B notes
Company C bonds
Cost
$ 535,300
159,380
662,750
Stoll enters into the following transactions involving its available-for-sale debt securities this year.
January 29 Sold one-half of the Company B notes for $79,200.
July 6 Purchased Company X bonds for $126,600.
November 13 Purchased Company Z notes for $267,900.
December 9 Sold all of the Company A bonds for $515,000.
Fair values at December 31 are B, $81,000; C, $665,000; X, $118,000; and Z, $278,000.
3. What amount of gains or losses on transactions relating to long-term investments in available-for-sale debt securities does Stoll
report on its income statement for this year?
Required information
[The following information applies to the questions displayed below.]
Stoll Company's long-term available-for-sale portfolio at the start of this year consists of the following.
Available-for-Sale Securities
Company A bonds
Fair Value
$ 495,000
Company B notes
Cost
$530,500
159,080
663,000
Company C bonds
147,000
648,390
Stoll enters into the following transactions involving its available-for-sale debt securities this year.
Sold one-half of the Company B notes for $78,170.
Purchased Company X bonds for $127,000.
January 29
July 6
November 13 Purchased Company Z notes for $267,500.
December 9 Sold all of the Company A bonds for $517,400.
Fair values at December 31 are B, $80,600; C, $600,800; X, $120,000; and Z, $279,000.
Required:
1. Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value adjustment
for the long-term investments in available-for-sale securities.
2. Determine the amount Stoll reports…
Chapter 16 Solutions
Intermediate Accounting (2nd Edition)
Ch. 16 - Prob. 16.1QCh. 16 - Is reporting an investment at its cost considered...Ch. 16 - Prob. 16.3QCh. 16 - Prob. 16.4QCh. 16 - Prob. 16.5QCh. 16 - Prob. 16.6QCh. 16 - What categories can managers use to classify...Ch. 16 - When is the equity method of accounting for...Ch. 16 - Prob. 16.9QCh. 16 - Can companies apply the fair value option to all...
Ch. 16 - What is the fair value hierarchy for investment...Ch. 16 - Prob. 16.12QCh. 16 - Prob. 16.13QCh. 16 - Prob. 16.14QCh. 16 - Prob. 16.15QCh. 16 - Prob. 16.16QCh. 16 - Prob. 16.17QCh. 16 - Deutsch Imports has three securities in its...Ch. 16 - Prob. 16.2MCCh. 16 - Prob. 16.3MCCh. 16 - Prob. 16.4MCCh. 16 - Prob. 16.5MCCh. 16 - Prob. 16.6MCCh. 16 - Prob. 16.7MCCh. 16 - Prob. 16.1BECh. 16 - Prob. 16.2BECh. 16 - Debt Investments, Trading. Using the information...Ch. 16 - Prob. 16.4BECh. 16 - Prob. 16.5BECh. 16 - Prob. 16.6BECh. 16 - Prob. 16.7BECh. 16 - Prob. 16.8BECh. 16 - Prob. 16.9BECh. 16 - Prob. 16.10BECh. 16 - Prob. 16.11BECh. 16 - Prob. 16.12BECh. 16 - Prob. 16.13BECh. 16 - Notes Receivable. Aaron Anatole accepted a...Ch. 16 - Prob. 16.15BECh. 16 - Prob. 16.16BECh. 16 - Prob. 16.17BECh. 16 - Debt Investments. Impairments. IFRS. For each debt...Ch. 16 - Prob. 16.19BECh. 16 - Prob. 16.1ECh. 16 - Prob. 16.2ECh. 16 - Prob. 16.3ECh. 16 - Prob. 16.4ECh. 16 - Prob. 16.5ECh. 16 - Prob. 16.6ECh. 16 - Prob. 16.7ECh. 16 - Debt and Equity Investments, Available-for-Sale...Ch. 16 - Prob. 16.9ECh. 16 - Equity Investments without a Readily Determinable...Ch. 16 - Prob. 16.11ECh. 16 - Prob. 16.12ECh. 16 - Prob. 16.13ECh. 16 - Equity-Investments, Equity Method. Book Value of...Ch. 16 - Prob. 16.15ECh. 16 - Prob. 16.16ECh. 16 - Notes Receivable. Each of the following three...Ch. 16 - Notes Receivable. On January 1, 2018, Racine...Ch. 16 - Debt Investment, Held to Maturity, Impairments....Ch. 16 - Debt Investment, Impairments, IFRS. Repeat E16-19...Ch. 16 - Prob. 16.21ECh. 16 - Prob. 16.22ECh. 16 - Prob. 16.23ECh. 16 - Prob. 16.24ECh. 16 - Prob. 16.25ECh. 16 - Prob. 16.1PCh. 16 - Debt Investments, Trading. Freder Software Group...Ch. 16 - Prob. 16.3PCh. 16 - Equity Investments, Readily Determinable Fair...Ch. 16 - Prob. 16.5PCh. 16 - Prob. 16.6PCh. 16 - Prob. 16.7PCh. 16 - Prob. 16.8PCh. 16 - Prob. 16.9PCh. 16 - Prob. 16.10PCh. 16 - Prob. 16.11PCh. 16 - Equity Investments, Equity Method, Fair Value...Ch. 16 - Prob. 16.13PCh. 16 - Prob. 16.14PCh. 16 - Prob. 16.15PCh. 16 - Prob. 16.16PCh. 16 - Prob. 16.17PCh. 16 - Prob. 16.18PCh. 16 - Prob. 16.19PCh. 16 - Prob. 1JCCh. 16 - Prob. 2JCCh. 16 - Prob. 1SSCCh. 16 - Prob. 1BCCCh. 16 - Prob. 2BCC
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