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Title: Problem 15-3A
QA_Ori:
Part 1
2013
Jan. 20 Long-Term Investments—AFS (J&J) 20,740
Feb. 9 Long-Term Investments—AFS (Sony) 55,665
June 12 Long-Term Investments—AFS (Mattel) 40,695
Dec. 31 Unrealized LossEquity 3,650
Fair Value Adjustment—AFS (LT)* 3,650
Annual adjustment to fair values.
* Cost Fair
Value
J & J $ 20,740 $ 21,500
J & J: 1,000 x $21.50 = $21,500
2014
Apr. 15 Cash 22,975
July 5 Cash 35,615
July 22 Long-Term Investments—AFS (Sara Lee) 13,980
Aug. 19 Long-Term Investments—AFS (Eastman Kodak) 15,498
Dec. 31 Unrealized LossEquity 10,168
* Cost Fair
Value
Kodak $15,498 $17,325
2015
Feb. 27 Long-Term Investments—AFS (Microsoft) 161,325
June 21 Cash 56,720
June 30 Long-Term Investments—AFS (Black & Decker) 50,835
Aug. 3 Cash 9,315
Nov. 1 Cash 19,850
Gain on Sale of Investments 4,352
Dec. 31 Fair Value Adjustment—AFS (LT)* 21,858
* Cost Fair
Value
Black & Decker $ 50,835 $ 54,600
Fair Value Adjustment account:
Part 2
12/31/2013 12/31/2014 12/31/2015
Long-Term AFS Securities (cost) $117,100 $85,143 $212,160
2013 2014 2015
Realized gains (losses)
* Equals the balance of the Fair Value Adjustment account.
Title: Problem 15-4A
QA_Ori:
Part 1
Available-for-sale securities on December 31, 2013
Security Cost Fair Value
Disclosure
The portfolio of available-for-sale securities would be reported on the December 31,
2013, balance sheet at its fair value of $1,088,612.
Part 2
Dec. 31 Fair Value Adjustment—AFS* 20,002
Unrealized Loss—Equity 20,002
Adjustment to fair value for AFS securities..
* December 31, 2012, available-for-sale securities
Cost _ Fair Value
December 31, 2013, adjustment to the Fair Value Adjustment account:
Part 3
Only gains or losses realized on the sale of available-for-sale securities appear on the
Year 2013 realized gains (losses)
Stock Sold Cost Sale Gain (Loss)
Title: Problem 15-5A
QA_Ori:
Part 1
1. Journal entries (assuming significant influence)
2013
Oct. 23 Cash 192,000
Dec. 31 Long-Term Investments—Kildaire 232,800
2014
Oct. 15 Cash 156,000
Dec. 31 Long-Term Investments—Kildaire 295,200
2015
Jan. 2 Cash 1,894,000
Original cost $1,560,000
3. Change in Selk's equity due to stock investment
Part 2
1. Journal entries (assuming NO significant influence)
2013
Oct. 23 Cash 192,000
Dec. 31 Fair Value Adjustment—AFS (LT)* 240,000
2014
Oct. 15 Cash 156,000
Dec. 31 Fair Value Adjustment—AFS (LT)* 120,000
2015
Jan. 2 Cash 1,894,000
Jan. 2 Unrealized Gain—Equity 360,000
2. Investment cost per share, January 1, 2015
3. Change in Selk’s equity due to stock investment
Title: Problem 15-6A
QA_Ori:
Part 1
2013
Apr. 8 Cash 5,938
Sales 5,938
July 21 Accounts ReceivableSumito 14,100
Sales 14,100
(1,500,000 yen x $0.0094/yen)
Dec. 31 Accounts ReceivableSmithers. 103
Foreign Exchange Gain * 103
Dec. 31 Foreign Exchange Loss* 77
Accounts ReceivableHamid Albar 77
2014
Jan. 12 Cash* 27,928
Jan. 19 Cash* 7,514
Part 2
Foreign exchange loss reported on the 2013 income statement
Part 3
To reduce the risk of foreign exchange gain or loss, Doering could attempt to negotiate
foreign customer sales that are denominated in U.S. dollars. To accomplish this,
NOTE: A few students may also understand Doering's opportunity for hedging. This
involves selling foreign currency futures to be delivered at the time the receivables from
foreign customers will be collected.
