Title: Exercise 15-8
QA_Ori:
2013
(a) Feb.
15
Short-Term Investments—HTM (A.G.) 160,000
(b) Mar.
22
Long-Term Investments—AFS (Fran) 35,850
(c) May
15
Cash 164,000
(d) July
30
Short-Term Investments—Trading (MP3) 100,000
(e) Sept.
1
Cash 700
(f) Oct.
8
Cash* 22,275
(g) Oct.
30
Cash 2,000
Title: Exercise 15-9
QA_Ori:
Computation of Fair Value Adjustment
Cost Fair
Value
Unrealized
Gain (Loss)
Nintendo Co. common stock $ 44,450 $ 48,900
Dec. 31 Unrealized Loss—Equity 850
Title: Exercise 15-10
QA_Ori:
Dec. 31 Fair Value Adjustment—AFS (LT) 32,078
Computation of Fair Value Adjustment
12/31/2012 12/31/2013
Cost $120,483 $60,120
Title: Exercise 15-11
QA_Ori:
2011
Dec. 31 Unrealized Loss—Equity 11,140
2012
Dec. 31 Fair Value Adjustment—AFS (LT)* 38,440
Unrealized Loss—Equity 11,140
2013
Dec. 31 Fair Value Adjustment—AFS (LT)* 73,000
Unrealized Gain—Equity 73,000
2014
Dec. 31 Unrealized Loss—Equity 96,700
Title: Exercise 15-12
QA_Ori:
1. Classification of Investments in Securities
a. The Brava Company bonds are a long-term investment in held-to-maturity debt
securities.
2. Fair Value Adjustment entry at December 31, 2013
Long-term AFS securities Cost Fair Value
Title: Exercise 15-13
QA_Ori:
2013
Jan. 2 Long-Term Investments—Grecco* 411,000
Cash 411,000
* Kodax’s investment equals 33 1/3% of Grecco’s stock (30,000/90,000). Kodax
should use the equity method to account for its investment.
Sept. 1 Cash 45,000
Dec. 31 Long-Term Investments—Grecco 162,300
2014
June 1 Cash 63,000
Dec. 31 Long-Term Investments—Grecco 234,250
Dec. 31 Cash 320,000
* Book value (Grecco stock) at 12/31/2014:
Original cost $411,000
Title: Exercise 15-14
QA_Ori:
2013 return on total assets
2014 return on total assets
Regae Industries appears to be less efficient in the use of its total assets in 2014 than in
2013 as suggested by the decline in return on total assets from 14.0% to 10.9%.
Title: Exercise 15-15
QA_Ori:
2013
Dec. 16 Accounts ReceivableBronson Ltd. 24,791
Dec. 31 Foreign Exchange Loss* 342
*Original measure = (17,000 x $1.4583) = $24,791
2014
Jan. 15 Cash (17,000 x $1.4482) 24,619
*Year-end measure = (17,000 x $1.4382) = $24,449
Title: Exercise 15-16
QA_Ori:
Quarter ended September 30, 2013
Quarter ended December 31, 2013
Quarter ended March 31, 2014
Note — The combined net gain for all four quarters equals:
This amount also equals the difference between the number of dollars finally received
Title: Exercise 15-17
QA_Ori:
1. Accounting for available-for-sale securities (and as explained in Carrefour’s
2. The entirety of the € 18 million net unrealized losses on available-for-sale
Title: Problem 15-1A
QA_Ori:
Part 1
2013
Jan. 20 Short-Term Investments—Trading (Ford) 20,925
Feb. 9 Short-Term Investments—Trading (Lucent) 97,928
Oct. 12 Short-Term Investments—Trading (Z-Seven) 5,825
2014
Apr. 15 Cash 22,915
July 5 Cash 7,585
Gain on Sale of Short-Term Investments 1,760
22 Short-Term Investments—Trading (Hunt) 48,444
Aug. 19 Short-Term Investments—Trading (D.Karan) 33,140
2015
Feb. 27 Short-Term Investments—Trading (HCA) 116,020
Mar. 3 Cash 39,750
June 21 Cash 91,980
30 Short-Term Investments—Trading (B&D) 57,595
Nov. 1 Cash 32,541
Part 2 (Adjusting entry at Dec. 31, 2015)
Dec. 31 Fair Value Adjustment—Trading* 985
* Fair Value adjustment computations
Trading securities’
portfolio Share
s
Share
Price at
12/31/15
Fair
Value Cost
Unrealized
Gain
(Loss)
00
15
Title: Problem 15-2A
QA_Ori:
Part 1
2013
Apr. 16 Short-Term Investments—AFS (Gem) 97,180
May. 1 Short-Term Investments—AFS (T-bills) 100,000
July 7 Short-Term Investments—AFS (Pepsi) 98,675
20 Short-Term Investments—AFS (Xerox) 16,955
Aug. 3 Cash 101,500
Short-Term Investments—AFS (T-bills) 100,000
15 Cash 3,400
28 Cash* 59,775
Short-Term Investments—AFS (Gem)** 48,590
Oct. 1 Cash 3,800
Dec. 15 Cash 2,100
31 Cash 2,600
Part 2
Comparison of Cost and Fair Values for AFS Portfolio
Cost Fair Value Unrealized
Gain (Loss)
Gem Co. (2,000 x $24.25) + 90a$48,590
2,000 x $26.50 $53,000
a Brokerage fee attached to remaining 2,000 shares: $180 x (4,000 sh –2,000 sh.)/
Part 3
Dec. 31 Unrealized LossEquity 4,470
Part 4
The balance sheet would report the cost of these short-term investments in
available-for-sale securities at $164,220 and show a subtraction of $4,470 for the fair
Part 5
(a) Income statement
(i) Interest Revenue, $1,500
(b) Equity section of Balance sheet