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CHAPTER 13 Investments and Fair Value Accounting
Ex. 13–25
Ex. 13–26
a. Year 1: Dividend Yield = $0.52 ÷ $30.48 = 1.71%
Ex. 13–27
The investor would receive a return on the investment through share price
Dividend Yield
=Cash Dividends per Share of Common Stock
Market Price per Share of Common Stock
13-21
CHAPTER 13 Investments and Fair Value Accounting
Appendix Ex. 13–28
Net income $50,000
Other comprehensive income (loss):
Appendix Ex. 13–29
Net income $210,000
Other comprehensive income (loss):
For the Year Ended December 31, 2014
CHEWCO CO.
For the Year Ended December 31, 2014
VALUR CO.
13-22
CHAPTER 13 Investments and Fair Value Accounting
Prob. 13–1A
1.
1 Investments—Buncombe Co. Bonds 50,000
Interest Receivable 250
Cash 50,250
16 Investments—French Broad Bonds 84,000
PROBLEMS
2014
Mar.
13-23
CHAPTER 13 Investments and Fair Value Accounting
Prob. 13–1A (Concluded)
1 Cash* 900
2. If the bonds are classified as available-for-sale securities, then the portfolio
of bonds would need to be adjusted to fair value. This would be accomplished
2015
Feb.
13-24
CHAPTER 13 Investments and Fair Value Accounting
Prob. 13–2A
1.
14 Investments—Wilkomm Inc.* 200,500
Cash 200,500
*(5,000 shares × $40 per share) + $500
30 Cash* 840
Dividend Revenue 840
*$179,400 – $186,438, in table below
Number
of Fair Value Fair
Shares per Share Cost Value
Wilkomm Inc. ………………
…
2,400 $40.10 $38 $ 96,240 $ 91,200
2014
Mar.
Share
per
Cost
1
13-25
CHAPTER 13 Investments and Fair Value Accounting
Prob. 13–2A (Concluded)
4 Investments—Daley Inc.* 105,175
Cash 105,175
2.
Current assets:
3. Unrealized gains or losses are reported on the income statement, often as
“Other Income (Losses).” For 2014, Scofield Financial Co. would have
2015
Apr.
Balance Sheet (selected items)
December 31, 2015
SCOFIELD FINANCIAL CO.
13-26
CHAPTER 13 Investments and Fair Value Accounting
Prob. 13–3A
1.
1 Investments—Acuity Inc.* 324,000
Cash 324,000
*12,000 shares × $27 per share
Feb.
2014
13-27
CHAPTER 13 Investments and Fair Value Accounting
Prob. 13–3A (Concluded)
16 Cash* 3,300
Dividend Revenue 3,300
2.
Current assets:
Available-for-sale investments (at cost)1$297,000
Plus valuation allowance for available-for-
DAFFITAR INC.
Balance Sheet (selected items)
December 31, 2015
Sept.
13-28
CHAPTER 13 Investments and Fair Value Accounting
Prob. 13–4A
Market
Cost per Value per
No. of Share (or Share (or
Shares (or $100 of $100 of Total Fair
Investments face amount) face amount) face amount) Cost Value
Bernard Co. stock……
…
2,250 $17.00 $15.40 $ 38,250 $ 34,650
13-29
CHAPTER 13 Investments and Fair Value Accounting
Prob. 13–4A (Continued)
The completed comparative unclassified balance sheets are as follows:
Dec. 31, Dec. 31,
2015 2014
Cash $233,000 $220,000
Note 1. Investments are classified as available for sale. The investments at cost
and fair value on December 31, 2014, are as follows:
No. of Cost per Total Total Fair
Shares Share Cost Value
O'BRIEN INDUSTRIES, INC.
Balance Sheet
December 31, 2015 and 2014
13-30
CHAPTER 13 Investments and Fair Value Accounting
Prob. 13–4A (Concluded)
For December 31, 2015:
Market
Cost per Value per
No. of Share (or Share (or
Shares (or $100 of $100 of Total Fair
face amount) face amount) face amount) Cost Value
Bernard Co. stock……
…
2,250 $17.00 $15.40 $ 38,250 $ 34,650
13-31
CHAPTER 13 Investments and Fair Value Accounting
Prob. 13–1B
1.
1 Investments—Smoke Bay Bonds 90,000
Interest Receivable 900
Cash 90,900
16 Investments—Geotherma Co. Bonds 42,000
2014
May
Apr.
13-32
CHAPTER 13 Investments and Fair Value Accounting
Prob. 13–1B (Concluded)
1 Cash* 2,340
2. If the bonds are classified as available-for-sale securities, then the portfolio
of bonds would need to be adjusted to fair value. This would be accomplished
2015
Feb.
13-33
CHAPTER 13 Investments and Fair Value Accounting
Prob. 13–2B
1.
14 Investments—Apollo Inc.* 124,992
Cash 124,992
Number
of Fair Value Fair
Shares per Share Cost Value
2014
Feb.
Share
per
Cost
1
13-34
CHAPTER 13 Investments and Fair Value Accounting
Prob. 13–2B (Concluded)
14 Investments—Athena Inc.* 78,120
Cash 78,120
2.
Current assets:
3. Unrealized gains or losses are reported in the income statement, often
as “Other Income (Losses).” For 2014, Zeus Investments Inc. would have
2015
Mar.
December 31, 2015
Balance Sheet (selected items)
ZEUS INVESTMENTS INC.
13-35
