Problem 12–4 (concluded)
Then, to record it at fair value, we increase the investment by $70 – 66.21 =
$3.79 million:
Requirement 5
Fuzzy Monkey’s 2016 statement of cash flows would be affected as
follows:
Operating activities cash flows: Cash inflow from interest of
$3.2 + 3.2 = $6.4. (Note: if Fuzzy Monkey prepares an
Requirement 6
The answers to requirements 1–5 would not differ if the investment
qualified for treatment as a held-to-maturity investment, because Fuzzy
12–82 Intermediate Accounting, 8/e
Problem 12–5
Requirement 1
2016
February 21
12–84 Intermediate Accounting, 8/e
Problem 12–5 (continued)
December 31
Adjusting entries:
Investment revenue receivable………………………………. 30,000
Problem 12–5 (continued)
Requirement 2
Income statement:
Investment revenue ($8,000 + 30,000) $ 38,000
12–86 Intermediate Accounting, 8/e
Problem 12–5 (continued)
Requirement 3
2017
January 20
Cash ………………………………………………………………….. 1,485,000
Gain on sale of investments (to balance) ……………….. 85,000
Problem 12–5 (continued)
December 31
Adjusting entries:
Investment revenue receivable………………………………. 30,000
Problem 12–5 (concluded)
Requirement 4
Income statement:
Investment revenue ($15,000 + 45,000 + 30,000) $ 90,000
Problem 12–6
Requirement 1
2016
December 12 ($ in millions)
Investment in FF&G Corporation bonds ………………………………. 12
12–90 Intermediate Accounting, 8/e
Problem 12–6 (continued)
December 28
Cash …………………………………………………………………………………. 0.2
Investment revenue …………………………………………………………. 0.2
December 31
Problem 12–6 (concluded)
Requirement 3
2017
January 2
($ in millions)
Cash (selling price) ……………………………………………………………….. 10.2
12–92 Intermediate Accounting, 8/e
Problem 12–7
2016 ($ in millions)
October 18
Investment in Millwork Ventures preferred shares ………………… 58
Cash …………………………..…………………………………………………. 58
Problem 12–7 (continued)
($ in millions)
December 29
Cash …………………………………………………………………………………. 3
Investment revenue ………………………………………………………. 3
December 31
Accrued interest:
12–94 Intermediate Accounting, 8/e
Problem 12–7 (concluded)
2017
January 7
Cash …………………………………………………………………………………. 43
Loss on sale of investments (to balance) ………………………………….. 1
Problem 12–8
Requirement 1
Beale should report its securities available-for-sale in its December 31, 2017,
balance sheet at their fair value, $54 million.
Requirement 2
12–96 Intermediate Accounting, 8/e
STATEMENT OF COMPREHENSIVE INCOME
($ in millions)
Net income ………………………………………. $xxx
Other comprehensive income:
Problem 12–8 (concluded)
Comprehensive income includes both net income and other comprehensive
income. Net income in 2017 includes the $3 million gain realized from selling the
12–98 Intermediate Accounting, 8/e
Problem 12–9
Requirement 1
Purchase ($ in millions)
Investment in Lavery Labeling shares …………………………………… 324
Cash …………………………………………………………………………….. 324
Net income
Adjusting entry
Problem 12–9 (concluded)
Requirement 2
Purchase ($ in millions)
Investment in Lavery Labeling shares …………………………………… 324
12–100 Intermediate Accounting, 8/e
Problem 12–10
Requirement 1
Purchase ($ in millions)
Investment in Lavery Labeling shares …………………………………… 324
Cash …………………………………………………………………………….. 324
Requirement 2
Because Runyan is accounting for the Lavery investment under the fair value