Name: Date:
Instructor: Course:
Cost
Fair
Value
Unrealized
Gain
(Loss)
Amount Amount Formula
Amount Amount Formula
Amount Amount Formula
Formula Formula Formula
Amount
Formula
Amount
Amount
Securities
Total of portfolio
(c) Compute the unrealized gains or losses and prepare the adjusting entry for Parnevik on
December 31, 2015.
(d) How should the unrealized gains or losses be reported on Parnevik’s balance sheet?
Available-for-Sale Portfolio—December 31, 2015
Munter Ltd.
King Co.
Castle Co.
Dec 31, 15
Previous securities fair value adjustment balance—Cr.
Securities fair value adjustment—Dr.
Account Title
Account Title
ch17.xlsx, Problem 17-5, Page 14 of 26, 2/24/2023, 11:45 AM
During 2014, the following transactions took place:
shares of Rogers Company at
Available-for-sale securities at cost:
1,000 $15.00 per share $15,000
1. On March 1, Rogers Company paid a
per share dividend.
per share
During 2015, the following transactions took place:
Rogers Company
Chance Company
5. On February 1, Castleman Holding, Inc. sold the remaining Chance shares for
paid in the next month.
7. On December 21, Evers Company declared a cash dividend of
300
100
stock at $16.00
$17.00
$2.00
$19.00
$21.00
P17-11 (Equity Investments—Available-for-Sale) Castleman Holdings, Inc. had the following available-
for-sale investment portfolio at January 1, 2014.
Instructions:
8. At December 31, 2015, the stocks had the following price per share values:
Evers Company
Rogers Company
6. On March 1, Rogers Company paid a
per share dividend.
Evers Company
2. On April 30, Castleman Holdings, Inc. sold
shares of Chance Company
3. On May 15, Castleman Holding, Inc. purchased
more shares of Evers Co.
per share
shares of Evers Company at
4. At December 31, 2014, the stocks had the following price per share values:
ch17.xlsx, Problem 17-11 Solution, Page 15 of 26, 2/24/2023, 11:45 AM
Name: Date:
Instructor: Course:
Cost
Fair
Value
Unrealized
Gain (Loss)
Fair
Value
Unrealized
Gain (Loss)
Evers Company ($15,000 + $1,600)
Rogers Company ($18,000)
Security
200
1,800
1,800
1,800
3,300
34,600 39,800 5,200
1,000
4,200
Available-for-sale securities, at fair value
Stockholders’ equity:
Accumulated other comprehensive gain
Current Assets – Dividends Receivable
Partial Balance Sheet as of:
December 31, 2014
December 31, 2015
Total of Portfolio
Previous securities fair value adjustment bal.—Cr.
Securities fair value adjustment—Dr.
(b) Prepare a partial balance sheet showing the Investments account at December 31, 2014, and 2015.
Dec 21, 14
7
Mar 1, 14
6
Security
ch17.xlsx, Problem 17-11 Solution, Page 16 of 26, 2/24/2023, 11:45 AM
36,400 37,400 1,000
8,500
Securities fair value adjustment—Dr.
Cash ($8.00 × 200 shares)
Chance Company ($4,500 – $2,700)
Total of Portfolio
Previous securities fair value adjustment bal.—Cr.
Evers Company ($15,000 + $1,600)
Rogers Company ($18,000)
During 2014, the following transactions took place:
shares of Rogers Company at
Available-for-sale securities at cost:
1,000 $15.00 per share $15,000
2. On April 30, Castleman Holdings, Inc. sold
shares of Chance Company
3. On May 15, Castleman Holding, Inc. purchased
more shares of Evers Co.
During 2015 the following transactions took place:
Rogers Company
Chance Company
6. On March 1, Rogers Company paid a
per share dividend.
$2.00
for $11.00
$17.00
$8
$3 per share to be
$19.00
$21.00
P17-11 (Equity Investments—Available-for-Sale) Castleman Holdings, Inc. had the following available-
for-sale investment portfolio at January 1, 2014.
Instructions:
paid in the next month.
8. At December 31, 2015, the stocks had the following price per share values:
Evers Company
Rogers Company
5. On February 1, Castleman Holding, Inc. sold the remaining Chance shares for
per share.
7. On December 21, Evers Company declared a cash dividend of
Evers Company
per share
1. On March 1, Rogers Company paid a
per share dividend.
shares of Evers Company at
4. At December 31, 2014, the stocks had the following price per share values:
ch17.xlsx, Problem 17-11, Page 17 of 26, 2/24/2023, 11:45 AM
Name: Date:
Instructor: Course:
Cost
Fair
Value
Unrealized
Gain (Loss)
Fair
Value
Unrealized
Gain (Loss)
Evers Company
Rogers Company
Security
Amount
Amount
Amount
Amount
Amount
Formula Formula Formula
Amount
Formula
Available-for-sale securities, at fair value
Stockholders’ equity:
Accumulated other comprehensive gain
Current Assets – Dividends Receivable
Partial Balance Sheet as of:
December 31, 2014
December 31, 2015
Total of Portfolio
Previous securities fair value adjustment bal.—Cr.
Securities fair value adjustment—Dr.
(b) Prepare a partial balance sheet showing the Investments account at December 31, 2014, and 2015.
Dec 21, 14
7
Mar 1, 14
6
Security
ch17.xlsx, Problem 17-11, Page 18 of 26, 2/24/2023, 11:45 AM
Formula Formula Formula
Securities fair value adjustment—Dr.
Account Title
Chance Company
Total of Portfolio
Previous securities fair value adjustment bal.—Cr.
Evers Company
Rogers Company
Miller Co. purchased a call option on Wade common shares on July 7, 2014, for
The call option is for
shares (notional value), and the strike price is
. (The market price of a share of Wade stock on that date is
$76.00
$30.00
$70.00
per share
per share
P 17-13 (Derivative Financial Instrument) The treasurer of Miller Co. has read on the Internet that the
September 30, 2014
$77.00
$180.00
December 31, 2014
$75.00
$65.00
Date
Time Value of Call Option
) The option expires on January 31, 2015. The following data are available with
respect to the call option
ch17.xlsx, Problem 17-13 Solution, Page 19 of 26, 2/24/2023, 11:45 AM
Name: Date:
Instructor: Course:
Solution
(d) Prepare the journal entry for Miller Co. for January 4, 2015—Miller settles the call option on the Wade
ch17.xlsx, Problem 17-13 Solution, Page 20 of 26, 2/24/2023, 11:45 AM
Miller Co. purchased a call option on Wade common shares on July 7, 2014, for
The call option is for
shares (notional value), and the strike price is
$76.00
$30.00
$70.00
$70.00
per share
per share
P 17-13 (Derivative Financial Instrument) The treasurer of Miller Co. has read on the Internet that the
. (The market price of a share of Wade stock on that date is
September 30, 2014
$77.00
$180.00
December 31, 2014
$75.00
$65.00
Date
Time Value of Call Option
) The option expires on January 31, 2015. The following data are available with
respect to the call option
ch17.xlsx, Problem 17-13, Page 21 of 26, 2/24/2023, 11:45 AM
Name: Date:
Instructor: Course:
(d) Prepare the journal entry for Miller Co. for January 4, 2015—Miller settles the call option on the Wade
ch17.xlsx, Problem 17-13, Page 22 of 26, 2/24/2023, 11:45 AM
Interest Expense
Cash [$10,000,000 × 8.00% × (1/2)]
months and will be used to determine the variable rate to be paid for the following 6-month period.
LIBOR rate on December 31, 2014, is
. The LIBOR rate will be reset every 6
$10,000,000 8.00%
8.00% and will pay a
$10,000,000 amount. The
at 8.00% 7.00%
Income Statement
Unrealized Holding Gain or Loss – Income
Balance Sheet
Swap Contract
Notes Payable
Unrealized Holding Gain or Loss – Income
Swap receivable [$10,000,000 × 8.00% × (1/2)]
Jun 30, 15 50,000
50,000
P 17-16 (Fair Value Hedge Interest Rate Swap) On December 31, 2014, Mercantile Corp. had a
fixed-rate note outstanding, payable in 2 years. It decides to enter into a
2-year swap with Chicago First Bank to convert the fixed-rate debt to variable-rate debt. The terms of
the swap indicate that Mercantile will receive interest at a fixed rate of
variable rate equal to the 6-month LIBOR rate, based on the
less amount payable at LIBOR,
Cash
Interest Expense
Interest Received
(Paid)
ch17.xlsx, Problem 17-16 Solution, Page 23 of 26, 2/24/2023, 11:45 AM
Name: Date:
Instructor: Course:
Swap Receivable [8.00% × $10,000,000 × (1/2)]
First six months
Second six months
Income Statement
$60,000
$10,060,000
Balance Sheet
Assets
Swap Contract
Liabilities
Notes Payable
and swap on June 30, 2015.
Balance Sheet
ch17.xlsx, Problem 17-16 Solution, Page 24 of 26, 2/24/2023, 11:45 AM
Liabilities
Income Statement
Account title
Account title
months and will be used to determine the variable rate to be paid for the following 6-month period.
LIBOR rate on December 31, 2014, is
. The LIBOR rate will be reset every 6
$10,000,000 8.00%
8.00% and will pay a
$10,000,000 amount. The
at 8.00% 7.00%
Income Statement
Account title
Balance Sheet
Account title
Account title
Account title
Text title
Jun 30, 15 Amount
Amount
P 17-16 (Fair Value Hedge Interest Rate Swap) On December 31, 2014, Mercantile Corp. had a
fixed-rate note outstanding, payable in 2 years. It decides to enter into a
2-year swap with Chicago First Bank to convert the fixed-rate debt to variable-rate debt. The terms of
the swap indicate that Mercantile will receive interest at a fixed rate of
variable rate equal to the 6-month LIBOR rate, based on the
less amount payable at LIBOR,
Account title
Account title
Interest Received
(Paid)
ch17.xlsx, Problem 17-16, Page 25 of 26, 2/24/2023, 11:45 AM
Name: Date:
Instructor: Course:
Text title
Text title
First six months
Second six months
Income Statement
Amount
Amount
Balance Sheet
Assets
Account title
Liabilities
Account title
and swap on June 30, 2015.
Balance Sheet
Liabilities
Income Statement