912
Problem 15-3B (Continued)
2018
Apr. 26
Cash ………………………………………………………………………………
50,043
Loss on Sale of Investments …………………………..
7,240
Nov. 27
Cash ……………………………………………………………………………..
29,755
29,090
Dec. 31
5,093
2,873
2,220
57,283
35,700
35,700
25,480
25,480
913
Problem 15-3B (Continued)
2019
Sept. 3
Long-Term Investments—AFS (Motorola) ………………………….
84,780
Cash ……………………………………………………….
Oct. 9
Cash ……………………………………………………………………………..
28,201
Gain on Sale of Investments …………………………..
Long-Term Investments—AFS (Sears) …………………………
Oct. 31
Cash ……………………………………………………………………………..
26,102
Long-Term Investments—AFS (Duracell) ……………………..
Fair Value Adjustment—AFS (LT)* …………………………..
Jan. 28
Long-Term Investments—AFS (Coca-Cola) ……………………….
41,480
Cash ……………………………………………………….
Aug. 22
Cash ……………………………………………………………………………..
23,950
Long-Term Investments—AFS (Apple) ………………………..
914
Problem 15-3B (Concluded)
Part 2
12/31/2017
12/31/2018
12/31/2019
Part 3
2017
2018
2019
Realized gains (losses)
Total realized gain (loss) ……………………
915
Problem 15-4B (50 minutes)
Part 1
1. Journal entries (assuming significant influence)
2017
916
Problem 15-4B (Continued)
2. Carrying value per share (see computations in part 1)
3. Change in Brinkley’s equity
Part 2
1. Journal entries (assuming NO significant influence)
2017
Jan. 5
Long-Term Investments—AFS (Bloch) …………………………..
200,500
200,500
917
Problem 15-4B (Concluded)
2018
2019
Jan. 8
Cash ………………………………………………………………………………
375,000
200,500
174,500
2. Investment cost per share, January 7, 2019
3. Change in Brinkley’s equity
Dividend Revenue (for 2017) …………………………
$ 21,000
Dividend Revenue (for 2018) …………………………
Aug. 1
Cash ………………………………………………………………………………
Dec. 31
918
Problem 15-5B (40 minutes)
Part 1
Available–for-sale securities on December 31, 2017
Security
Cost
Fair Value
27,500 shares of Company R common stock ………….
$559,125
$568,125
Disclosure
Part 2
Dec. 31
Unrealized Loss⎯Equity ………………………………………………..
16,267
Unrealized Gain⎯Equity …………………………………………………
Part 3
Only gains or losses realized on the sale of available-for-sale securities
11,000 shares of Company T stock ……..
147,295
154,050
42,500 shares of Company V common stock ………….
49,920
$975,330
$959,063
919
Serial Problem — SP 15
Serial Problem, Business Solutions (35 minutes)
Part 1
2018
Part 2 Adjusting entry at June 30, 2018
Reporting in Action — BTN 15-1
2. Apple’s other comprehensive income (loss) for the year ended
Other comprehensive income (loss):
3. Yes. Its consolidated statement of comprehensive income does include
4. Return on total assets for the year ended September 26, 2015, ($
millions) follows:
5. Answer depends on the annual report information obtained.
921
Comparative Analysis — BTN 15-2
1. Apple’s return on total assets
2. Return on total assets = Profit margin x Total asset turnover
—— Returns in part 2 can differ from those in part 1 due to rounding ——
Apple’s component analysis of return on total assets*
Current Year
Google’s component analysis of return on total assets*
922
Comparative Analysis (Concluded)
3. Current Year Analysis: Apple has the higher return on total assets
One Year Prior Analysis: Apple has the higher return on total assets
923
Ethics Challenge — BTN 15-3
1. Kasey’s bonus is not contingent on the classification of available-for-
sale versus held–to-maturity. Designation of the bonds as available–for–
2. Generally, Kasey must classify its debt securities as either short or long
term and as available–for-sale or held–to-maturity. Since the bonds are
Communicating in Practice — BTN 15-4
TO: Mary Jolee
FROM: (Your Name)
SUBJECT: Sale of Kemper Common Stock
The $6,000 loss on the sale of Kemper common stock is correctly stated.
Jolee Company owned 40% of the outstanding shares, and therefore
accounts for the investment according to the equity method. Under the
Taking It to the Net — BTN 15-5
($ millions for Parts 1 through 4)
925
Teamwork in Action — BTN 15-6
Entrepreneurial Decision — BTN 15-7
1.
Jan. 1
Long-Term Investments—Sustain*…………………
15,500
15,500
July 1
Long-Term Investments— Sustain …………………
Hitting the Road— BTN 15-8
There is no specific solution to this activity. The instructor should serve as
a facilitator during this learning activity and, potentially, open a classroom
discussion around student findings.
926
Global Decision— BTN 15-9
1. Samsung (₩ in millions)
Return on total assets = Net Income / Average Total Assets
Current Year
2. (a) Current Year Analysis: Samsung vs Apple vs Google
Return on total assets = Profit margin x Total asset turnover
Company
Return on total assets
Profit margin
Total asset turnover
21.8
Samsung
9.5
927
Global Decision (Concluded)
2. (b) Prior Year Analysis: Samsung vs Apple vs Google
Return on total assets = Profit margin x Total asset turnover
Company
Return on total assets*
Profit margin
Total asset turnover