PROBLEM 17-10B
(a) January 1, 2014
Fair value of available-for-sale securities …………… $363,000
Accumulated other comprehensive income ……….. (45,000)
Cost basis………………………………………………………… $318,000
December 31, 2014
Fair value of available-for-sale securities …………… $310,000
(b) ARTIC INC.
Statement of Comprehensive Income
For the Year Ended December 31, 2014
Net income ………………………………………………………….. $39,000
Other comprehensive income
Total holding gains arising during the year …….. $16,000*
PROBLEM 17-10B (Continued)
(c) ARTIC INC.
Balance Sheet
As of December 31, 2014
Assets
Stockholders’ Equity
Cash
$151,000*
Common stock
$389,000
comprehensive income
PROBLEM 17-11B
(a)
1. 6/15/14 Cash ……………………………………………… 2,500
Dividend Revenue (2,500 X $1) … 2,500
4. 12/31/14 Unrealized Holding Gain
or Loss—Equity …………………………... 7,500
Fair Value Adjustment
(Available-for-Sale) ……………….. 7,500
Security
Cost
Fair Value
Perr Comp. ($65,000 + $14,000)
$79,000
$87,000(1)
Fair value adjustment—Cr.
5. 3/1/15 Cash ……………………………………………… 22,000
Loss on Sale of Investments
PROBLEM 17-11B (Continued)
7. 12/13/15 Dividend Receivable ……………………… 4,500
Dividend Revenue (3,000 X $1.50) 4,500
Security
Cost
Fair Value
Unrealized
Gain (Loss)
Perr Comp.
$79,000
$90,000(1)
$11,000
Quail Comp.
(1)(3,000 X $30) (2)(1,200 X $17)
(b)
Partial Balance Sheet as of
December 31,
2014
December 31,
2015
Current Assets
Dividend receivable
$ 0
$ 4,500
Equity investments (Available-
Accumulated other
PROBLEM 17-12B
(a) Balance Sheet
Equity Investments (Available-for-Sale), at fair value ……… $178,000
(Reported as current or noncurrent based on intent)
Income Statement
No effect
(b) Balance Sheet
Equity Investments (Available-for-Sale), at fair value ……… $224,000
Income Statement
Other Expenses and Losses
Loss on Sale of Investments …………….. $5,400*
*The entry made to recognize the loss on sale is as follows:
PROBLEM 17-12B (Continued)
(c) Balance Sheet
Equity Investments (Available-for-Sale), at fair value …….. $61,500
(Reported as current or noncurrent based on intent)
Income Statement
Other Expenses and Losses
Gain on Investments ($8,500 – $2,400) …………………… $6,100
(d) (1) Statement of Comprehensive Income
Reports unrealized holding gain of $6,000 as part of comprehen-
sive income.
(2) Statement of Comprehensive Income
*PROBLEM 17-13B
(a) August 21, 2014
Call Option …………………………………………………….. 387
Cash ………………………………………………………… 387
(b) September 30, 2014
(c) December 31, 2014
Call Option ($1 X 300) ……………………………………… 300
Unrealized Holding Gain or Loss—Income …. 300
(d) January 4, 2015
Unrealized Holding Gain or Loss—Income ……….. 1,200
Call Option ($4 X $300) ……………………………… 1,200
*Value of Call Option at Settlement:
Call Option
*PROBLEM 17-14B
(a) July 7, 2014
Put Option ……………………………………………………….. 400
Cash ………………………………………………………….. 400
(b) September 30, 2014
Unrealized Holding Gain or Loss—Income …………. 150
Put Option ($400 – $250) …………………………….. 150
*PROBLEM 17-15B
(a) March 17, 2014
Put Option ……………………………………………………… 280
Cash ………………………………………………………… 280
Unrealized Holding Gain or Loss—Income ……….. 150
Put Option ($220 – $70) ……………………………… 150
(d) July 6, 2014
Put Option ($3 X 300) …………………………..………….. 900
*Value of Put Option at settlement:
Put Option
280
60
900
35
*PROBLEM 17-16B
(a) (1) No entry necessary at the date of the swap because the fair value
of the swap at inception is zero.
(2) June 30, 2015
(3) June 30, 2015
Cash ………………………………………………………… 25,000
(4) June 30, 2015
Unrealized Holding Gain or Loss—
Income ………………………………………………… 85,000
Notes Payable ………………………………… 85,000
(5) June 30, 2015
Swap Contract ………………………………………….. 85,000
Unrealized Holding Gain or Loss—
Income …………………………………………… 85,000
(b) Financial statement presentation as of December 31, 2014
*PROBLEM 17-16B (Continued)
(c) Financial statement presentation as of June 30, 2015
Balance Sheet
Assets
(d) Financial statement presentation as of December 31, 2015
Balance Sheet
Liabilities
Notes Payable 4,800,000
Swap Contract 200,000
Income Statement
*Swap receivable
(6% X 5,000,000 X 1/2) $ 150,000
Payable at LIBOR
(4.5% X 5,000,000 X 1/2) 112,500
Cash settlement $ 37,500
*PROBLEM 17-17B
(a) April 1, 2014
Memo entry to indicate entering into the futures contract.
(d) November 8, 2014
Inventory ……………………………………………………….. 408,000
Cash ($1,360 X 300 ounces) ………………………. 408,000
(e) December 1, 2014
Cash………………………………………………………………. 2,200,000
Sales Revenue …………………………………………. 2,200,000
*PROBLEM 17-17B (Continued)
(f) ALLAHAR COMPANY
Partial Balance Sheet
At June 30, 2014
Current Assets
Futures contract …………………………..…………………………... $36,000
(g) ALLAHAR COMPANY
Income Statement
For the Quarter Ended December 31, 2014
Sales revenue …………………………………………………………… $2,200,000
*PROBLEM 17-18B
(a) (1) November 1, 2014
Equity Investments (Available-for-Sale) ……… 400,000
Cash (20,000 X $20) ……………………………… 400,000
(2) December 31, 2014
Fair Value Adjustment (Available-for-Sale) …. 20,000
(3) March 31, 2015
Unrealized Holding Gain or Loss—Income …. 60,000
Unrealized Holding Gain or Loss—Equity…… 20,000
*PROBLEM 17-18B (Continued)
(4) June 30, 2015
Unrealized Holding Gain or Loss—Income …. 20,000
Fair Value Adjustment
(5) July 1, 2015
Cash ($4 X 20,000) …………………………………….. 80,000
Loss on Settlement of Put Option ………………. 285
*PROBLEM 17-18B (Continued)
(b) CANO COMPANY
Partial Balance Sheet
At December 31, 2014
Assets
Stockholders’ Equity
Accumulated other comprehensive income ……………….. $ 20,000
CANO COMPANY
Income Statement
For the Year Ended December 31, 2014
$ (680)
(c) CANO COMPANY
Partial Balance Sheet
At June 30, 2015
CANO COMPANY
Partial Income Statement
For Six Months Ended June 30, 2015
Other Income (Loss)