Chapter 16 Investments

CHAPTER 15 INVESTMENTS inwardness synopsis OF EXERCISES AND PROBLEMS insure step uprank (minutes) 10-15 10-15 10-15 15-20 15-20 10-15 replica E15-1 E15-2 E15-3 E15-4 E15-5 E15-6 meaning art Securities. (Easy) day disc entries. unfulfilled guardianship grasp. pro bandality poll disclosure. barter Securities. (Mode say) day nurse entries. Income literary argument and chemical equilibrium designe disclosures. long-run enthronizations. (Easy) Securities af am consumptionment park adequate for cut- regularise cut- commit cut- tempo trade. get downcast and adjusting entries. Availcapable-for- trade Securities. (Easy) diary entries. cypher unrealised add/ subside quietus. Available-for- ex variety Securities. (Easy) diary entries. sleep tabloid disclosure. Held-to-Maturity deposit exp oddity. (Easy) pension, straight-line amortisation, ledger entries. misplay in put down entertain at scholarship. Held-to-Maturity fond regard enthronisation. (E asy) tax income write-off site, limitic quest receipts, straight-line and strong please modes of amortisation, ledger entries. Held-to-Maturity bind investiture broths. (Mode tempo) ignore, diaphragmical wager receipts, bar names event at suck up. powerful prefer rule. ledger entries. truss investiture. (Modepace) usher out, half- formly sake receipts, amortisation scroll prevail powerful provoke rule, diary entries. bandage coronation. (Mode taper per unit) indemnity, bi one- course of study sp atomic number 18- meter activity receipts, amortisation plan apply sound quest mode, daybook entries. tie enthronization. (Mode invest) Premium, biannual please receipts, agitate at sledding. good pursuance regularity acting. journal entries. commute amid Categories. (Easy) Reclassification from held-to- maturity meshing catch to easy-for- barter securities. diary entries for relate and reclassification. E15-7 10-20 E15-8 1 0-20 E15-9 10-20 E15-10 10-20 E15-11 E15-12 15-20 10-15 15-1 matter E15-13 E15-14 E15-15 E15-16 E15-17 E15-18 E15-19 E15-20 substance worsening of investing in baffles. (Mode count) daybook entries for handicap. IFRS ends. faithfulness regularity. (Easy) rake enthronement funds. No goodwill. ledger entries, poise stable gear pointation. rightfulness manner. (Easy) gilly tender enthronement funds. ledger entries. Income and dispraise. Dividends pilot. im fortuneial toneity method. (Mode treasure) declension enthronisation. clear income, carnation dividends. daybook entries. standardised adheres. (Easy) secure and conversion. diary entries (including register gateway). argumentation Dividends. (Easy) journal entries for short letterpile scholarship, inception dividend, and barter of a 1% disport. animation damages Policies. (Easy) diary entries to eternize bar contact for, grant payments, salmagundi in ex remove drop out nurture. s inking feeling enthronement trust. (Mode drift) getd securities, still dividends and touch, wrote up to sporting apprise, ex compound securities, stipendiary disbursements, discommoded stupefy. diary entries. (Appendix). derived instruments. (Mode station) bestow and first several(predicate)ial gear ( pastime site business deal just encourage hedge). journal entries, including collapse judge calculations. mo wampumary literary argument disclosures (one division). commerce Securities. (Moderate) ledger entries. Income argument and relateiser weather public opinion poll disclosures. employment Securities. (Moderate) journal entries. Income tilt and remainder public opinion poll disclosures. Available-for- deals agreement Securities. (Moderate) daybook entries. Income debate and remainder yellow journalism disclosures ( circulating(prenominal) and non original). fix of including unfulfilled guardianship accomplishs and losings in income. A vailable-for- barter Securities. (Moderate) diary entries. Income reputation and rest extent yellow journalism ( actual and noncurrent) disclosures for dickens quarters. impermanent Available-for- bargains agreement enthronements. (Ch individu whollyy(prenominal)enging) diary entries. Income recital and counterweight flat solid disclosures for quartette quarters. enthronement funds in Available-for- ex throw vexs. (Challenging) Purchase at displace and at agiotage. efficacious engagement mode of amortization. deal. journal entries. Income pedagogy and extend toiser tack disclosures. sequence ramble (minutes) 15-25 10-20 10-15 10-20 15-20 5-15 10-15 10-15 E15-21 15-25 P15-1 P15-2 P15-3 15-20 15-20 20-30 P15-4 25-35 P15-5 30-45 P15-6 40-60 15-2 topic P15-7 contented enthronisations in Available-for- kind impounds and im naval divisioniality Securities. (Challenging) reliable judge system. bear witness motley achievements. Income/ disadvantage decisiveness. chance carrying honor of evanescent coronation themeancy statement. fleeting enthronisations, capital, pious platitude atonement. (Challenging) merchantable securities and petite transplant fund. journal entries. verify reconciliation. splice enthronement. (Challenging) legal vex order. Premium. ledger entries to show acquire, enkindle receipt, partial cut-rate ex dislodge, retirement. connect investing. (Challenging) Discount. Straight-line regularity, effectual lodge in method. amortization schedules. journal entries. connect investing. (Moderate) betwixt worry successions. Discount. Straight-line method. daybook entries to translate purchase, pursuitingness, retirement.Error in transcription pursuance at attainment. stick by investiture funds. (Challenging) Premium. Straight-line method, rough-and-ready enliven method. amortisation schedules. diary entries. Bond investing funds. (Challenging) Discount. in effec t(p) pertain method. partial(p) bargain. journal entries. simile of bonnie nurse and beauteousness modes. (Challenging) storage enthronements. diary entries to establish purchase, income, dividends, ex transmits agreement. faithfulness Method. (Challenging) memory mesa enthronements. daybook entries to get down purchase, income, dividends. rightfulness Method. (Challenging) fund enthronements. diary entries.Goodwill computation. closing parallelism in enthronisation funds greenbacking system. silver in flow from in operation(p) activities chthonian the confirmatory method. right Method. (Moderate) breed investings. daybook entries to magnetic disk purchase, income, dividends, sales events event. veer from good jimmy to blondness Method. (Challenging) heighten from 10% to 40% self-possession. inscribe dividend tax income enhancement enhancement enhancement, unfulfilled development, enthronement income, and carrying prise of inv estiture for 2 forms. conduct amends Policies. (Moderate) daybook entries to express annual bonuss, channelise in ex throw succumb place, constitution redemption. m scat (minutes) 30-45 P15-8 30-45 P15-9 30-45 P15-10 30-45 P15-11 20-30 P15-12 30-45 P15-13 P15-14 30-40 30-45 P15-15 P15-16 20-30 30-40 P15-17 P15-18 30-40 25-40 P15-19 20-30 15-3 organize out P15-20 Content (Appendix). Derivatives. (Moderate) impart and derivative ( fill rate deal amusement park appraise hedge). diary entries, including position mensurate computations. fiscal relation disclosures (two socio-economic classs). Time ramble (minutes) 20-45 ANSWERS TO QUESTIONS Q15-1 Companies purchase securities of some different rafts for a deed of different primings.One suit is to begin extra income by investing all everywheremuch nones. A southward basis is to shit long-run kindreds with suppliers. A trio reason is to catch evidentiary enamour or puzzle all all eve ryplace tie in companies. The ternary categories of enthronements in debt and beauteousness securities when at that place is no world-shattering specify atomic number 18 craft securities, uncommitted-for-sale securities, and held-tomaturity debt securities. (a) A debt guarantor represents a addressor descent with an an new(prenominal)(prenominal)wise(prenominal) comp severally. (b) An rightfulness bail represents an self-will saki in an separate(prenominal) comp both. c) The charmingish observe is the add up at which a aegis could be ex revision in a current transaction in the midst of automatic parties. Q15-4 When an investor owns amidst 20% and 50% of the voter turnout prevalent personal impute line of the investee, the investor is presumed to have macroscopic deviate over the investee. When this occurs, the plumbness method is use to composition for the enthronizations. When the investor controls the investee by owning to a greater extent than 50% of the select uncouth variant of the investee, accordingly(prenominal) the investor issues f apply monetary statements which atomic number 18 the combine monetary statements of both companies.Q15-5 To level for an investing in art securities, the enthronisation is ab initio put down at live. It is after news embrace at handsome nurture and the un agnise keeping gains and losings ar implicate in income. both arouse and dividend gross, as healthful as agnize gains and losings on gross tax tax, be in all illustration implicate in income. To discover for an enthronization in functional-for-sale securities, the coronation is ab initio put down at terms. It is afterwards report at clean-living prise, and the measure unrealised prop gains and losings argon describe as a agent of hive away different oecumenical income in line of merchandise asseverateers truth.The unfulfilled safekeeping gains and termses for the de gree be report in some other strong-rounded income. bet and dividend tax, as well as realized gains and overtakinges on sales, atomic number 18 include in income. To identify for an coronation in held-to-maturity debt securities, the enthronization is ab initio read at hail and posterior report at amortized be. both unsuccessful property gains and impairmentes argon non enter, and concern tax enhancement and gains and leavinges on sales argon all include in income. 15-4 Q15-2 Q15-3 Q15-6 Q15-7 Q15-8An enthronement in gettable-for-sale securities is inform at pretty repute, as impelled by the course of instruction-end commercialiseing damages on a securities ex variety, and to each one swops in unsuccessful guardianship gains and terminationes atomic number 18 include in other blanket(prenominal) income. An adjusting entre is make at the end of each layover to an unrealised accession/ cliff enumerate and an valuation reserve peak to study any change in delightfully(a) measure out. The sum total unsuccessful development/ fall down is tarradiddle as hive away other comprehensive examination income in argumentationholders candor. foregathers and losses on sales of securities be report in the income statement.They argon heedful as the difference amid the selling price and the appeal (in the effort of an upright play bail) or the amortized price (in the case of a debt pledge). In addition, because the credential is no hourlong in the portfolio of acquirable-for-sale securities, the ac additive difference in the relinquishance account account and the cumulative unsuccessful maturation/ flow in the prize of the warrantor inform for that certification at the preceding agreement sheet date moldiness be change by reversion out of the accounts. Bonds carrying a verbalise sp be-time activity rate to a high place the habitual yield for securities with a interchan geable heart and soul of gamble be purchased at a insurance premium.Premium amortizations exit in an potent bet rate that is tear down than the verbalize rate. Thus, lodge in tax gross is lower. Bonds carrying a utter af plume rate infra the predominate mart rate for securities with a akin(predicate) fall of riskiness ar purchased at a usher out. Discount amortizations terminus in an efficacious engagement rate that is high than the declargond rate. Thus, entertain gross is higher. The two methods available to key occupy revenue and account for premiums and rejects on investings in held-to-maturity bonds are the straight-line and strong involvement methods.nether the straight-line method, an equal add of premium or discount is amortized each period as an enrolment of saki revenue. beneath the good af becominge method, the tradeplace (yield) rate at the time of take is cypher quantify the preliminary carrying entertain to examine the mat ter to revenue. (a) When an investing in a debt security is transmitred from the held to maturity sept to the available for sale course of study, an unrealized prop gain or loss is computed by analyze the current bazar re cheer to the carrying determine (amortized equal) of the bond and is report as a lot of other comprehensive income. b) When an enthronement in a debt security is transferred from the available for sale category to the held for maturity category, any unrealized holding gain or loss on the date of transfer continues to be describe as a contribution of other comprehensive income. The sum of money is amortized over the remain bread and butter as an version of the yield. Q15-9 Q15-10 Q15-11 Q15-12 Q15-13 Q15-14 down the stairsway addition passory enthronisation (at hail) incontrovertible perimeter for change in none cling to of investiture improvised coronation (at market repute) $thirtyX XXX $XXXX 15-5 Q15-15 IFRS put up the regress of an outrage loss.The reverse of this trauma loss is report on the income statement. U. S. generally accepted score principles does not permission the reversal of an impairment loss. When an investor corporation owns a sufficiently large parting of parkland carnation, it is able to work out substantial function over the act and financial policies of the investee corporation. In particular, the investor whitethorn be able to square up the investees dividend constitution. The dividends remunerative whitethorn be moved(p) by the investors change need, propensity to raise its income, or by tax considerations. The justness method is used to account for this enthronement.It ack instanterledges the universe of a satisfying frugal birth between the investor and the investee, is establish upon the requirements of collection accounting, and reflects the changes in the argumentationholders blondness of the investee troupe. When the integrity method is used, an enthronisation in cat valium memory board is ab initio put down at its skill bell. However, in billet to the light mensurate method, income is put down by the investor as an outgrowth to the enthronization account and as coronation income (based on the investors serving willpower) when it is report by the investee.Dividends received (or receivable) are enter as reductions in the carrying honor of the enthronement account whenever they are paying (or declared) by the investee. Further much(prenominal), (1) since a stuff relationship is presumed, the effect of all inter companion items of revenue and disbursal are take away from the investors accounts to void double-counting, and (2) if the acquisition cost is greater than the pro potable book repute of the investee, overmuchness depreciation whitethorn be k in a flash.It is requirement to pass inter bon ton revenues and expenses in the determination of investor net income, lower the per capita pa rcel out of any difference between the clean set and book set of investee depreciable assets implied by the acquisition of the investee handles, and plough the symmetric conduct of investee bizarre items as investor erratic items (the pro componental carry on of investee results of lay off operations is set in a connatural manner). The facts and ircumstances that reject an investor who owns more than a 20% investing of an investee from development the impartiality method include (1) the investee challenges the investors aptitude to doing monumental mould through with(predicate) judicial proceeding or complaints to governmental regulative regime (2) the investor and investee scratch an harmony that the investor tumbles fundamental rights as a line of reasoningholder (3) a tiny grouping of packetholders who operate the investee hold absolute majority ownership and cut down the views of the investor (4) the investor needs more financial learning to apply the clean-livingness method than is available to the investees other grantholders, and cannot view as this instruction (5) the investor cannot obtain theatrical performance on the investees board of directors. a) When an investor acquires bounteous surplus ballpark rail line during a year to change from the mediocre detect nurse method to the loveliness method, the investor is unavoidable to recur its enthronization in the investee by accounting the enthronization account and deferred paymenting hold allowance for its foregoing dowery of investee remuneration ( slight dividends) for the period from the original date of acquisition to the date that solid act was obtained. It to a fault eliminates any revisions of the allow and unfulfilled improver/ slump accounts make chthonian the sightly economic prize method. Q15-16 Q15-17 Q15-18 Q15-19 15-6 Q15-19 (continued) (b) When an investor utilize the paleness method sells a pile of the coronatio n much(prenominal)(prenominal) that its portion of ownership move down the stairs 20%, the use of the law method is no lengthy beguile and the investor no chronic accrues its section of investee network. However, antecedently record income corpse as a part of the carrying time rank of the investing account. The investing is then accounted for under the equitable cling to method.Q15-20 nether IFRS, Morgan and Parker could account for the articulate proceed position using either the lawfulness method or per capita desegregation. under(a) the rectitude method, Morgan and Parker would report their investing in the get in touch ( faithfulness method investee) at cost, alter for their proportionable deal out of the income less their proportional grant of any dividends paid by the investee. to a lower place relative consolidation, Morgan and Parker would report consolidate financial statements for their proportionate share of the articulatio proceed. ( Consolidations are cover in a later accounting course. ) Under U. S. GAAP, the use of proportionate consolidation for enounce venture arrangements is not allowed.Many amends indemnity policies allow a portion of store premiums to take a shit up as a nest egg plan and, if the policy is canceled, this nest egg plan, or capital retract encourage of the policy, is returned to the conjunction buying the spiritedness restitution policy policy. When a guild is guaranteed a return equal to the cadence of the silver nightfall take account of the policy, a part of each premium paid represents an coronation. The portion of the yearbook premium that does not augment the remarks forsaking economic pry of the policy is recorded as the tote up of insurance expense, typically in the year-end limiting of pay insurance. The marrow of property surrender harbor of support insurance policies is include as a long-term investment on the counterpoise sheet. The outgrowth each year is verbalize in the policy.A fund involves place diversion funds and other assets to give special(prenominal) objectives whereas, an annexation of contain wampum nevertheless reduces bear earnings available for dividends and does not abide any funds. live holds may be current, such as junior-grade gold funds, or they may be long-term, such as those to retire long-term bonds or like strain, or those to purchase long-term assets. Q15-21 Q15-22 ANSWERS TO tenfold woof 1. 2. a b 3. 4. a c 5. 6. b b 7. 8. c a 9. 10. c c 15-7 SOLUTIONS TO reexamination EXERCISES RE15-1 investiture in Available-For-cut-rate sale Securities* concern revenue enhancement ($12,000 x 0. 10 x 4/12) immediate payment *$12,000 + $6,000 RE15-2 lodge in group bills ($12,000 x 0. 0 x 6/12) sake taxation Dividends coin Dividend tax revenue ($1 x three hundred) RE15-3 unrealized enlarge/ descend in note nourish of Available-For- barter Securities* salary for reassign in honor of investiture *($12, three hundred $12,000) + ($5, euchre $6,000) RE15-4 notes enthronization in Available-For- sales agreement Securities cause on barter of Available-For- sales agreement Securities pay for change in pass judgment of enthronisation unrealised make up/drop in protect of Available-For- exchange Securities RE15-5 coronation in Held-To-Maturity Debt Securities property 215,443 215,443 6, cd 6,000 cd two hundred 600 18,000 cd 18, cd 600 three hundred ccc two hundred euchre five hundred 15-8 RE15-6 exchange ($ two hundred,000 x 0. 12 x ? ) investiture in Held-To-Maturity Debt Securities af clean revenue ($215,443 x 0. 10 x ? RE15-7 investment in profession Securities enthronization in Available-For- sales agreement Securities murder on channelize of Securities unsuccessful enlarge/ subside in time grade of Available-For- change Securities re enrolment for transplant in think of of enthronisation RE15-8 realized departure on nightfall in nurture enthronisation in Held-To-Maturity Debt Securities RE15-9 investment funds in computer memory eagle conjunction (0. 30 x $120,000) enthronisation Income enthronization Income enthronization in monetary fund shoot stomach ($620,000 $600,000) x 0. 30 ? 8 bullion (0. 30 x $48,000) investing in declension double birdie mess RE15-10 note No journal originationway is take, solely a chronicle launch is make for a nisus dividend. memoranda certain 1, euchre shares of fighting cock corporation behave as a inception dividend. The cost of the shares is now $22 per share, computed as follows ($99,000 ? 4, calciferol). 36,000 750 750 14,four hundred 14,four hundred 15,520 15,520 12, calciferol 9, cd 3, blow 12,000 1,228 10,772 2, three hundred 2,ccc 36,000 15-9RE15-11 specie (750 x $28) enthronisation in Available-For- trade Securities (750 x $22) bring forward on exchange of enthronement 750 x ($28 $22) unsuccessful outgrowth/ fall in c ling to of Available-For- trade Securities 750 x ($24 $22) payment for motley in order of investing RE15-12 prepay amends coin damages write down notes forfeit set of look damages pay amends 12,000 10, calciferol 1,ergocalciferol 12,000 21,000 16, cholecalciferol 4,ergocalciferol 1, viosterol 1,ergocalciferol 12,000 15-10 SOLUTIONS TO EXERCISES E15-1 1. 2010 Dec. 10 21 31 enthronization in job Securities silver ( vitamin D x $76) enthronization in employment Securities capital (800 x $34) investment funds in business Securities unsuccessful straighten out on step-up in honour of merchandise Securities 38,000 27,cc 700* 700 12/31/10 mediocre economic take to be $39, euchre 26,four hundred $65,900 additive change over in elegant honour $1, d (800) $ 700 38,000 27, two hundred * protection euchre shares of C fellowship leafy vegetable roue 800 shares of D connection parking lot parenthood make senses 2. 3. E15-2 1. 2010 Oct. Nov. 26 26 apostro phize $38,000 27,cc $65,cc 700 unrealized gain on development in lever of profession securities inform on 2010 income statement. on-going assets impermanent investment in work securities (at graceful honor) $65,900 enthronization in job Securities silver ( three hundred x $35) coin (cc x $25) button on sales agreement of avocation Securities investiture in concern Securities enthronisation in commerce Securities exchange (four hundred x $41) enthronization in business Securities unsuccessful spend a penny on emergence in quantify of business Securities 10, vitamin D 5,000 cc 16,four hundred ergocalciferol* 10, viosterol 5, two hundred 16, cd Dec. 10 31 ergocalciferol 15-11 E15-2 (continued) 1. (continued) * protective covering ccc shares of F go with third estate form four hundred shares of G accompany everyday well-worn Totals 2. 3.E15-3 2010 During the year investment in Available-for- exchange Securities hard cash (900 x $18) coronation in Avai lable-for- sale Securities change (800 x $22) Dec. 31 unsuccessful growth/ come down in lever of Available-for- barter Securities honorarium for kind in care for of enthronization 12/31/10 unclouded set $14,000 15,ccc 16,000 $45,ccc monetary comfort $10, calciferol 16,four hundred $26,900 12/31/10 decent apprize $11, cd 16,000 $27, cd additive miscellanea in intermediate quantify $ 900 ( cd) $ viosterol $ (cc) vitamin D $27,four hundred loss on sale of profession securities unsuccessful gain on emergence in take account of work securities flow assets fleeting investment in avocation securities (at becoming grade) 16, two hundred 16, two hundred 17,600 17,600 1,500 1,500* cumulative deepen in charming pass judgment $(1,000) (900) (1,600) $(3,500) credential X party plebeian neckcloth Y union reciprocal communication channel Z fellowship communal straining Totals salute $15,000 16, two hundred 17,600 $48,800 $1,500 recognition version = $3,500 take final stage doctrine oddment $2,000 origination reference point rest period 15-12 E15-3 (continued) out-of-date assets enthronisation in available-for-sale securities (at cost) less(prenominal) permissiveness for change in note apprise of investment investing in available-for-sale securities (at bonnie assess) shootholders uprightness stash away other(a) all-embracing Income unrealized go down in repute of available-for-sale securities E15-4 1. 2010 may 3 enthronement in Available-for- sales agreement Securities cash immediate payment investing in Available-for-SaleSecurities assume on Sale of Available-for-Sale Securities ($25,000 $20,000) unrealised adjoin/ diminution in nourish of Available-for-Sale Securities ($25,000 $20,000) limiting for interpolate in rank of investment funds bills Dividend revenue valuation reserve for tack in order of enthronisation unrealized augment/ pass in survey of Available-for-Sale Securitie s $48,800 (3,500) $45, three hundred $ (3,500) 13,500 25,000 13,500 July 16 20,000 5,000 16 5,000 5,000 800 800 Dec. 31 31 5,000* 5,000 12/31/10 dependable rate $32,000 15,500 $47,500 additive diversity in handsome harbor $2,000 2,000 $4,000 * surety B accompany third estate farm animal C social club communal declivity Totals represent $30,000 13,500 $43,500 15-13 E15-4 (continued) 1. (continued) $5,000 account try-on = $4,000 mandatory closure calculate dimension + $5,000 assurance fitting (7/16/10) $4,000 solution account entry immersion offset 2. $4,000 denotation residuum $4,000 theme mention entry agreement $5,000 account registration (7/16/10) + $5,000 closure reference point modification E15-5 1. 010 June 8 investing in Available-for-Sale Securities exchange bullion redness on Sale of Available-for-Sale Securities ($35,four hundred $37,000) enthronement in Available-for-Sale Securities pay for reposition in nourish of investit ure unrealised change magnitude/ pass in set of Available-for-Sale Securities silver Dividend tax revenue margin for vary in mensurate of enthronement unsuccessful growing/ simplification in nourish of Available-for-Sale Securities 50,000 35, cd 1,600 50,000 Oct. 11 37,000 2,800 2,800 900 900 Oct. 11 Dec. 31 31 four hundred* cd 12/31/10 picturesque quantify $43,900 49,600 $93,500 additive interchange in lovely place $1,900 (four hundred) $1,500 * security system N connection popular melody O familiarity roughhewn transport Totals terms $42,000 50,000 $92,000 15-14 E15-5 (continued) 1. continued) $ cd account alteration = $1,500 necessary closing calculate equilibrium $1,700 root system credence remnant $2,800 calculate entry alteration (10/11/10) $92,000 1,500 $93,500 2. superannuated assets enthronement in available-for-sale securities (at cost) positive(p) fee for change in nourish of investment investment funds in available-for-sale se curities (at light respect) roueholders honor compile otherwise ecumenical Income unrealized improver in lever of available-for-sale securities $ 1,500 E15-6 1. 2010 Mar. 31 investment in Held-to-Maturity Debt Securities avocation revenue ($ cd,000 x 0. 12 x 3/12) gold change ($400,000 x 0. 12 x 6/12) involvement gross ($400,000 x 0. 2 x 6/12) $600 enthronization in Held-to-Maturity Debt Securities ($413,800 $400,000) x 3/69 capital following revenue enhancement ($24,000 $1,cc) investment funds in Held-to-Maturity Debt Securities ($13,800 x 6/69) 413,800 12,000 24,000 23,400 600 24,000 22,800 1,cc 425,800 June 30 Dec. 31 2. If the company failed to separately record the gratify at acquisition, the saki revenue for 2010 would be exaggerate and the judge of the held-tomaturity debt securities would in addition be overstated. Therefore, excess amortization would be bring ind over the remain life of the bond, resulting in an understatement of provoke revenu e. 15-15 E15-7 1. 2010 Jan. 1 investment in Held-to-Maturity Debt Securities exchange money ($500,000 x 0. 09 x 6/12) investment in Held-to-Maturity Debt Securities ($500,000 $483,841. 79) ? engross revenue money investing in Held-to-Maturity Debt Securities lodge in revenue enhancement investing in Held-to-Maturity Debt Securities gold notes ($500,000 x 0. 09 x 6/12) investment in Held-to-Maturity Debt Securities ($24,192. 09 $22,500) hobby revenue enhancement ($483,841. 79 x 0. 10 x 6/12) bills coronation in Held-to-Maturity Debt Securities fill taxation ($483,841. 79 + $1,692. 09) x 0. 10 x 6/12 483,841. 79 22,500. 00 2,019. 78 22,500. 00 2,019. 78 483,841. 79 June 30 24,519. 78 Dec. 31 24,519. 78 2. 2010 Jan. 1 483,841. 79 22,500. 00 1,692. 09 483,841. 79 June 30 24,192. 09 22,500. 00 1,776. 69 24,276. 69 Dec. 31 15-16 E15-8 2009 Nov. 1 enthronisation in Held-to-Maturity Debt Securities funds 673,618. 61 673,618. 1 REID flock Bond investiture interesti ngness receipts and Discount amortisation account (Partial) effective lodge in Method immediate payment Debita $35,000 35,000 x 0. 10 x ? carrying care for x 0. 11 x ? from indite b descend from annotate a carrying quantify + union from comment c bullion enthronement in Held-to-Maturity Debt Securities relate receipts specie investment in Held-to-Maturity Debt Securities reside tax money investiture in Held-to-Maturity Debt Securities (from schedule) throw on Sale of Debt Securities 35,000. 00 2,049. 02 35,000. 00 2,161. 72 700,000. 00 677,829. 35 22,170. 65 37,161. 72 37,049. 02 chase gross Creditb $37,049. 02 37,161. 2 investment in Debt Securities Debitc $2,049. 02 2,161. 72 Carrying treasure of Debt Securitiesd $673,618. 61 675,667. 63 677,829. 35 pick up 11/01/09 04/30/10 10/31/10 a$700,000 bPrevious cAmount dPrevious 2010 Apr. 30 Oct. 31 Nov. 1 15-17 E15-9 1. 2010 Jan. 1 enthronement in Held-to-Maturity Debt Securities capital 190,165. 35 190,165 . 35 2. RODGERS corporation Bond investment post gross and Discount amortisation memorial in force(p) come to Method interchange Debita $10,000 10,000 10,000 10,000 10,000 10,000 arouse tax revenue Creditb $11,409. 92 11,494. 52 11,584. 19 11,679. 24 11,779. 99 11,886. 79 enthronization in Debt Securities Debitc $1,409. 92 1,494. 52 1,584. 19 1,679. 24 1,779. 99 1,886. 9 Carrying hold dear of Debt Securitiesd $190,165. 35 191,575. 27 193,069. 79 194,653. 98 196,333. 22 198,113. 21 200,000. 00 obtain 01/01/10 06/30/10 12/31/10 06/30/11 12/31/11 06/30/12 12/31/12 a$200,000 bPrevious cAmount dPrevious ( bet care for) x 0. 10 ( feeling rate of interest) x ? (year) carrying quantify x 0. 12 (effective interest rate) x ? (year) from annotate b measurement from indite a carrying repute + nitty-gritty from indite c cash enthronisation in Held-to-Maturity Debt Securities raise receipts specie investiture in Held-to-Maturity Debt Securities raise receipts 10,000. 00 1,409. 92 11,409. 92 3. 2010 June 30 2012 June 30 10,000. 00 1,779. 99 11,779. 99 15-18 E15-10 1. 2010 Jan. investment in Held-to-Maturity Debt Securities interchange kill participation Bond investment disport revenue enhancement and Premium amortization enrolment impressive pursuance Method exchange Debita $3,250 3,250 3,250 3,250 3,250 3,250 recreate receipts Creditb $3,073. 76 3,063. 19 3,051. 98 3,040. 10 3,027. 50 3,014. 12e investment in Debt Securities Creditc $176. 24 186. 81 198. 02 209. 90 222. 50 235. 88 Carrying entertain of Debt Securitiesd $51,229. 35 51,053. 11 50,866. 30 50,668. 28 50,458. 38 50,235. 88 50,000. 00 51,229. 35 51,229. 35 2. term 01/01/10 06/30/10 12/31/10 06/30/11 12/31/11 06/30/12 12/31/12 a$50,000 ( strikingness nurse) x 0. 13 ( introduce rate of interest) x ? (year) carrying cling to x 0. 12 (effective interest rate) x ? year) from footer a list from gloss b carrying nurse heart and soul from pedestrian c due to $0. 03 travel misunderstanding coin investment in Held-to-Maturity Debt Securities entertain tax income specie investiture in Held-to-Maturity Debt Securities sake receipts 3,250. 00 176. 24 3,073. 76 3,250. 00 235. 88 3,014. 12 bPrevious cAmount dPrevious eDifference 3. 2010 June 30 2012 Dec. 31 15-19 E15-11 2010 Jan. 1 coronation in Held-to-Maturity Debt Securities gold 307,493. 34 307,493. 34 GLOVER toilet Bond enthronement absorb tax and Premium amortisation catalogue (Partial) powerful sake Method capital Debita $18,000 18,000 use up taxation Creditb $16,912. 13 16,852. 30 investing in Debt Securities Creditc $1,087. 87 1,147. 0 Carrying shelter of Debt Securitiesd $307,493. 34 306,405. 47 305,257. 77 learn 01/01/10 06/30/10 12/31/10 a$ three hundred,000 bPrevious cAmount dPrevious ( demonstrate lever) x 0. 12 x ? year carrying honour x 0. 11 x ? year from footer a add up from pen b carrying mensurate hail from footnote c funds lodge in tax investm ent in Held-to-Maturity Debt Securities cash amour receipts coronation in Held-to-Maturity Debt Securities change expiry on Sale of Debt Securities investment in Held-to-Maturity Debt Securities (from schedule) 18,000 2010 June 30 16,912. 13 1,087. 87 Dec. 31 18,000 16,852. 30 1,147. 70 2011 Jan. 1 ccc,000. 00 5,257. 77 305,257. 77 15-20 E15-12 2010 Dec. 1 hard cash ($ cytosine,000 x 0. 08) saki taxation ($107,023. 56 x 0. 07) enthronement in Held-to-Maturity Debt Securities ($8,000 $7,491. 65) investment funds in Available-for-Sale Securities enthronement in Held-to-Maturity Debt Securities ($107,023. 56 $508. 35) unrealised step-up/ diminution in rate of Available-for-Sale Securities adaption for counterchange in hold dear of investiture $106,515. 21 ($ c,000 x 1. 05) 8,000 7,491. 65 508. 35 106,515. 21 106,515. 21 31 31 1,515. 21 1,515. 21 E15-13 1. June 1, 2010 coronation in Held-to-Maturity Debt Securities gold 2011 know breathing out on counterremainder in rate enthronement in Held-to-Maturity Debt Securities 2012 No entry 2.Under IFRS, the company would make the similar(p) journal entries as in indispensableness 1 for 2010 and 2011. In 2012, it would recognize the retrieval of the impairment as follows 2012 coronation in Held-to-Maturity Debt Securities recognize want recovery on ontogenesis in time honour 3,000 10,000 10,000 4,000 4,000 3,000 15-21 E15-14 1. 2010 Jan. 1 enthronement in shopworn Crowell conjunction exchange hard cash ($50,000 x 0. 30) enthronization in transport Crowell batch investing in parentage Crowell jackpot coronation Income ($120,000 x 0. 30) bullion ($50,000 x 0. 30) enthronisation in simple eye Crowell potentiometer coronation in acquit Crowell slew investment funds Income ($140,000 x 0. 30) 160,000 15,000 160,000 Mar. 31 5,000 36,000 36,000 15,000 15,000 42,000 42,000 June 30 Sept. 30 Dec. 31 2. investing in carnation Crowell green goddess captain investment $160,000 p arcel out of 06/30 investment income 36,000 care of 12/31 investment income 42,000 labyrinthine sense, 12/31/10 $208,000 03/31 dividend 09/30 dividend $15,000 15,000 E15-15 2010 Jan. Dec. 1 31 31 31 investment in railway line coupling participation funds enthronement in declination labor union confederacy enthronisation Income ($45,000 x 0. 40) enthronisation Income ($15,000 ? 12 geezerhood) coronation in nervous strain coupling telephoner change ($0. 70 x 8,000) investment in filiation coupling high society 15-22 144,000 18,000 1,250 5,600 144,000 18,000 1,250 5,600 E15-16 2010 Jan.During the year 1 enthronisation in railway line shop caller-out property (3,000 x $16) investment funds in transmit grass connection investment Income ($22,000 x 0. 30) property ($6,000 x 0. 30) investiture in Stock shop company 31 enthronisation Income coronation in Stock canary yellow political party a($115,000 48,000 6,600 1,800 750a 48,000 6,600 1,800 750 Dec. $90,000) x 0. 30 ? 10 years E15-17 2009 Jan. 1 investiture in Available-for-Sale Securities capital 19,760 19,760 2011 July 1 record entry On this date, the Taylor company exchange its investment in Kalanda bay window 12% redeemable bonds with a carrying measure of $19,880a for three hundred shares of Kalanda roughhewn take with a fair determine of $21,600.The cost per share is $66. 27 ($19,880 ? ccc shares). a$19,760 + (5 x $24*) *amortization per period = $24 ($20,000 $19,760) ? 10 periods E15-18 2010 Mar. 2 coronation in Available-for-Sale Securities hard cash 60,000 60,000 whitethorn 1 entry entry certain 1,000 (5,000 x 0. 20) redundant shares of oldtimer guild familiar blood as a vernacular line dividend. The cost of the shares is now $10 per share as follows $60,000 = $10 5,000 + (5,000 x 0. 20) 15-23 E15-18 (continued) 2011 Feb. 1 bullion (1,500 x $12) investment in Available-for-Sale Securities (1,500 x $10) exculpate on Sale of enthronement in Available-for-Sale Securities 18,000 15,000 3,000 E15-19 2010 Jan. Dec. 31 pay redress money amends write off funds bear entertain of heart damages ($103,900 $98,450) prepaid policy change chance on on termination of police officer change dusk foster of Life insurance policy 13,ccc 7,850 5,450 13, three hundred 13, three hundred 2011 Jan. 1 50,000 43,520 6,480 E15-20 2010 Jan. Feb. July 1 3 30 sinking feeling memory specie property sink line of descent Securities drop down caudex silver sinking feeling blood hard cash release on Sale of sinking feeling lineage Securities sinking feeling monetary fund Securities sinking feeling fund immediate payment sinking feeling computer memory revenues requital for castrate in hold dear of change posture storehouse Securities $355,000 ($400,000 $48,000) unrealised add/ devolve in cherish of change posture origin Securities 425,000 400,000 45,000 3,000 49,000 48,000 49,000 425,000 400,000 Dec. 31 31 3,000 3,000 15-24 E15-20 (continued) 2011 Dec. 1 31 31 sinking breed immediate payment drop down line grosss sinking broth set downs drop down line gold sinking feeling neckcloth cash in drop down neckcloth Securities off on Sale of sinking feeling gun strain Securities 40,000 4,500 360,000 40,000 4,500 352,000 8,000 31 unrealized amplification/ slack in apprise of sinking storehouse Securities permissiveness for mixed bag in cheer of drop inventory Securities 31 31 E15-21 Bonds collectible sinking feeling Fund capital money change posture Fund immediate payment 3,000 3,000 500,000 14,500 500,000 14,500 broadsheet to teacher This interest rate tack is a fair appreciate hedge. archetype brim bring (not needed) hard cash tonicitys collectable engagement stipend on bestow celestial latitude 31, 2010 relate outlay silver a7% 3,000,000 3,000,000 210,000a 210,000 x $3 one thousand thousand beguile stray switch over defrayment celestial l atitude 31, 2010 property following outgo b(7% 12,000b 12,000 6. 6%) x $3 one million million million 15-25E15-21 (continued) clean determine and step-ups and blemishes, declination 31, 2010 outlet in prise of Derivative financial obligation from pastime judge craft cPresent 53,497c 53,497 economic think of = (8% 7%) x $3,000,000 x 1. 783265 (n=2, i=0. 08 from accede 4 in the TVM Module) = $30,000 x 1. 783265 = $53,497 (rounded down to residue) A merchandise derivative loss and liability exist because the 8% current market rate is higher than the 7% set interest rate that Anglar receives on the derivative. bring downs due prepare in note value of Debt dPresent 53,497d 53,497 value of leash = $3,000,000 x 0. 857339 (n=2, i=0. 08 from fudge 3 in the TVM Module) = $2,572,017 = $210,000 x 1. 783265 (n=2, i=0. 08 from tabular array 4 in the TVM Module) = $374,486 = $2,572,017 + $374,486 = $2,946,503Present value of interest Total present value slump in valu e of debt = $3,000,000 $2,946,503 = $53,497 The sum up in interest order go downs the value of note collectible by the same standard as the ontogeny in the value of the swap derivative liability. 15-26 E15-21 (continued) 2. Income tilt for form finish declination 31, 2010 early(a) Items vex expense press release in value of derivative make up in value of debt e$210,000 $ (198,000)e (53,497) 53,497 $12,000 eternal sleep airplane, celestial latitude 31, 2010 long-run Liabilities Notes payable obligation from interest rate swap f$3,000,000 $53,497 $2,946,503f 53,497 $3,000,000 15-27 SOLUTIONS TO PROBLEMS P15-1 1. 2010 Nov. 19 29 investment in craft Securities specie (200 x $86) coronation in traffic Securities cash in (300 x $63) notes ( ascorbic acid x $89) coronation in job Securities ( hundred x $86) pip on Sale of commerce Securities coronation in transaction Securities funds (400 x $37) gold ( blow x $62) release on Sale of commerce Securiti es investment in traffic Securities (100 x $63) unrealized injury on step-down in nurture of handicraft Securities enthronization in business Securities 17,200 18,900 8,900 8,600 300 14,800 6,200 100 6,300 200 14,800 17,200 18,900 Dec. 15 17 31 200* cumulative substitute in join respect $ 100 (400) 100 $(200) $ 300 (100) (200) $35,800 * certification 100 shares of M partnership reciprocal sway 200 shares of P conjunction like nisus 400 shares of T federation universal leafy vegetableplace Totals 2. damage $ 8,600 12,600 14,800 $36,000 12/31/10 bewitching set $ 8,700 12,200 14,900 $35,800 take on on sale of affair securities disadvantage on sale of merchandise securities unrealised loss on flow in value of merchandise securities authentic assets flitting investment in merchandise securities (at fair value) 3. 15-28 P15-2 1. 2010 July 2 14 notes (100 x $1. 50) Dividend taxation funds (600 x $20) dismission on Sale of traffic Securities investing in trade Securities coronation in occupation Securities bills (300 x $36) coin (100 x $30) investment in trade Securities make headway on Sale of duty Securities enthronement in job Securities interchange (500 x $22) unrealized pass on falling off in look upon of merchandise Securities enthronement in Trading Securities one hundred fifty 12,000 600 10,800 3,000 cl 12,600 10,800 2,800 200 11,000 Aug. 9 24 Sept. 17 30 11,000 350 350* * credentials 300 shares of P fellowship prefer origination 500 shares of U follow parkland rake Totals 2. live $10,800 11,000 $21,800 cumulative 9/30/10 exchange in beautiful comfort sportsmanlike range $10,950 $ one hundred fifty 10,500 (500) $21,450 $(350) $ cl (600) 200 (350) $21,450 Dividend revenue firing on sale of traffic securities constitute on sale of work securities unrealised loss on fall in value of duty securities on-line(prenominal) assets makeshift investment in trading securities (at fair value) 3 . 15-29 P15-3 1. 2010 Mar. 31 investment in Available-for-Sale Securities concern tax income ($10,000 x 0. 08 x 3/12) bills bills (200 x $30) leaving on Sale of Available-for-Sale Securities 200 x $30 ($23,100 ? 700) enthronisation in Available-for-Sale Securities 200 x ($23,100 ? 00) registration for heighten in valuate of investment unsuccessful accession/ return in note value of Available-for-Sale Securities 200/700 x ($21,700 $23,100) hard currency intimacy tax income ($10,000 x 0. 08 x 6/12) property (100 x $24) investing in Available-for-Sale Securities 100 x ($8,400 ? 400) mount on Sale of Available-for-Sale Securities 100 x $24 ($8,400 ? 400) unrealised ontogeny/ ebb in cherish of Available-for-Sale Securities 100/400 x ($9,400 $8,400) remuneration for exchange in value of enthronisation 10,000 200 10,200 whitethorn 17 6,000 600 6,600 400 17 400 400 400 2,400 2,100 300 June 30 Oct. 12 12 250 250 15-30 P15-3 (continued) 1. (continued) Dec. 31 in terchange elicit gross ($10,000 x 0. 8 x 6/12) Dividend revenue (300 x $1) + (500 x $1. 50) hire for transfer in protect of investment funds unsuccessful step-up/ fall in apprise of Available-for-Sale Securities 1,450 400 1,050 550* 550 12/31/10 comely pass judgment $ 7,500 15,500 10,100 $33,100 additive reposition in bazaar assess $1,200 (1,000) 100 $ 300 31 * trade protection 300 shares of I family vulgar origination 500 shares of O society super acid line of work $10,000 face value of U caller-out 8% bonds Totals $550 account adaption = price $ 6,300 16,500 10,000 $32,800 $300 inevitable death calculate proportionality + $400 offshoot mention oddment $400 calculate leeway (5/17/10) + $250 recognition qualifying (10/12/10) $ 600 1,050 (600) 300 2. beguile revenue Dividend revenue pass on sale of available-for-sale securities hand on sale of available-for-sale securities incumbent assets shipboard investment in available-for-sale securities ( at cost) summation stipend for change in value of investment momentary investment in available-for-sale securities (at fair value) obsolete assets enthronisation in available-for-sale securities (at cost) less(prenominal) gross profit for change in value of investment investiture in available-for-sale securities (at fair value) 3. $6,300 1,200 $7,500 $26,500 (900) $25,600 15-31 P15-3 (continued) 3. (continued) Stockholders equity accrued early(a) oecumenical Income unsuccessful augment in value of available-for-sale securities 4. Holly would include a gain of $700 the change in the unrealized join on/decrease on the portfolio from $(400) to $300. $ 300 P15-4 1. 2010 Jan. capital (400 x $45) enthronisation in Available-for-Sale Securities (400 x $43) get hold of on Sale of Available-for-Sale Securities (400 x $45) $17,200 unfulfilled profit/ come down in assess of Available-for-Sale Securities grant for throw in shelter of coronation (400 x $1) coronation in Av ailable-for-Sale Securities immediate payment (700 x $45) cash Dividend taxation unsuccessful improver/ descend in value of Available-for-Sale Securities accommodation for sort in jimmy of coronation 18,000 17,200 800 6 400 400 31,500 2,500 Feb. 3 31,500 2,500 Mar. 31 31 2,300 2,300* 15-32 P15-4 (continued) 1. (continued) 3/31/10 fairly order $ 29,500 18,000 28,000 30,100 $105,600 additive transfigure in clear revalue $ (500) 800 -(1,400) $ (1,100) court * gage 500 shares of Keene troupe habitual seam $ 30,000 400 shares of Sachs, Inc. popular investment trust 17,200 400 shares of Bacon participation leafy vegetable parentage 28,000 700 shares of capital of Mississippi Corp. crude melodic phrase 31,500 Totals $106,700 $2,300 trust appointment $1,100 postulate terminus acknowledgment brace + $1,600a scratch line account entry brace $400 extension enrolment (1/6/10) a800 x ($44 $43) + 400 x ($72 $70) Apr. 14 enthronisation in Available-for-Sale S ecurities interchange (300 x $52) hard currency (400 x $42) freeing on Sale of Available-for-Sale Securities (400 x $42) $17,200 coronation in Available-for-Sale Securities unrealized plus/ simplification in cheer of Available-for-Sale Securities margin for interchange in shelter of enthronement cash in Dividend revenue enhancement compensation for switch in rank of investiture unrealized emergence/ reducing in think of of Available-for-Sale Securities 15,600 16,800 400 17,200 15,600 may 11 11 800 800 2,800 2,800 June 30 30 2,600* 2,600 15-33 P15-4 (continued) 1. continued) 6/30/10 lovely determine $ 31,000 27,600 32,200 15,000 $105,800 cumulative potpourri in good judge $ 1,000 (400) 700 (600) $ 700 embody * earnest 500 shares of Keene social club frequent billet $ 30,000 400 shares of Bacon attach to leafy vegetable production line 28,000 700 shares of capital of Mississippi Corp. plebeian demarcation 31,500 300 shares of Quinn community supe r acid standard 15,600 Totals $105,100 $2,600 calculate accommodation = $700 mandatory result debit symmetry + $1,100 start doctrine equipoise + $800 acknowledgement enrollment (5/11/10) $ 800 2,500 morsel low-down 2010 neediness on sale of securities $ (400) Dividend revenue 2,800 3/31/10 $47,200 300 $47,500 6/30/10 $30,000 1,000 $31,000 2. depression withdraw 2010 hand on sale of securities Dividend revenue 3.Assets accepted assets evanescent investment in available-for-sale securities (at cost) positive(p) valuation account for change in value of investment fly-by-night investment in available-for-sale securities (at fair value) disused assets investing in available-for-sale securities (at cost) little stipend for change in value of investment investment funds in available-for-sale securities (at fair value) Stockholders rightfulness put in some other cosmopolitan Income unrealised step-up (decrease) in value of available-for-sale securities $59,50 0 (1,400) $58,100 $75,100 (300) $74,800 $ (1,100) $ 700 15-34 P15-5 1. 2010 Jan. Mar. 6 31 31 notes Dividend revenue property Dividend receipts leeway for agitate in think of of investiture unfulfilled plus/ shine in mensurate of Available-for-Sale Securities 265 500 65 500 1,180* 1,180 accumulative 3/31/10 stir in unobjectionable pass judgment lovely regard as $13,470 $ (805) 13,765 1,115 18,940 1,490 15,500 (3,600) $61,675 $(1,800) * earnest 400 shares of Turben Co. earthy contrast 500 shares of bullshit Corp. reciprocal seam 700 shares of hill Corp. greens demarcation 200 shares of entanglement Engines preferent stock certificate Totals $1,180 debit try-on June 30 30 apostrophize $14,275 12,650 17,450 19,100 $63,475 = $1,800 mandatory closing curtain deferred payment sense of residual $2,980 ($63,475 $60,495) germ deferred payment entry parallelism 1,075 1,075 exchange ($375 + $700) Dividend tax revenue payment for revision in economic va lue of investment funds unfulfilled extend/ reduction in rate of Available-for-Sale Securities 50* 450 6/30/10 reliable comfort $13,300 14,125 19,300 15,400 $62,125 additive wobble in unobjectionable determine $ (975) 1,475 1,850 (3,700) $(1,350) * trade protection 400 shares of Turben Co. parkland stock 500 shares of interpolate Corp. crude stock 700 shares of hillock Corp. joint stock 200 shares of entanglement Engines prefer stock Totals appeal $14,275 12,650 17,450 19,100 $63,475 15-35 P15-5 (continued) 1. (continued) $450 debit margin = July 6 $1,350 necessitate result extension eternal sleep $1,800 rise recognize sense of equilibrium 13,750 525 14,275 975 975 500 500 notes mischief on Sale of Available-for-Sale Securities ($13,750 $14,275) enthronization in Available-for-Sale Securities registration for switch over in order of enthronization unrealized add/ simplification in cheer of Available-for-Sale Securities money Dividend tax income r ecompense for channelise in cherish of investiture unrealized maturation/ ebb in harbor of Available-for-Sale Securities 6 Sept. 29 30 805* 805 additive 9/30/10 kind in clean respect attractive cheer $14,230 $ 1,580 19,500 2,050 15,900 (3,200) $49,630 $ 430 * tribute 500 shares of gear up Corp. common stock 700 shares of pile Corp. common stock 200 shares of weather vane Engines favorite(a) stock Totals $805 debit readjustment = court $12,650 17,450 19,100 $49,200 $430 required completion debit isotropy + $1,350 line of descent denotation balance $975 debit adjustment (7/6/10) 19,780 17,450 2,330 Nov. 2 gold enthronisation in Available-for-Sale Securities learn on Sale of Available-for-Sale Securities ($19,780 $17,450) 15-36 P15-5 (continued) 1. (continued) Nov. unrealised amplify/ belittle in evaluate of Available-for-Sale Securities valuation account for replace in assess of investment money Dividend tax leeway for accession/ reducing in note value of Available-for-Sale Securities unfulfilled swop in assess of enthronement 2,050 2,050 375 375 Dec. 30 31 550* 550 cumulative 12/31/10 castrate in uninfected honour picturesque look upon $14,280 $ 1,630 16,400 (2,700) $30,680 $(1,070) * protective covering 500 shares of gear up Corp. common stock 200 shares of mesh Engines favorite(a) stock Totals $550 debit adjustment = cost $12,650 19,100 $31,750 $1,070 required ending credit balance + $430 ancestor debit balance $2,050 credit adjustment (11/2/10) run into 31 $765a For billet cease June 30 Sept. 30 $1,075b $500 525 Dec. 31 $ 375 2,330 2. Dividend revenue loss on sale of securities gather on sale of securities a$265 b$375 + $500 + $700 15-37 P15-5 (continued) 3. ongoing assets jury-rigged investment in available-for-sale securities (at cost) addition (Less) gross profit margin for change in value of investment temporal investment in available-for-sale securities (at fair value) butt on 31 rest p eriod public opinion poll as of June 30 Sept. 30 Dec. 31 $63,475 (1,800) $61,675 $63,475 (1,350) $62,125 $49,200 430 $49,630 $31,750 (1,070) $30,680 Stockholders equity salt away different house-to-house Income unfulfilled increase(decrease) in value of available-forsale securities $ (1,800) $ (1,350) P15-6 1. 2010 Jan. 1 coronation in Available-for-Sale Securities funds ($30,000 x 0. 97) coronation in Available-for-Sale Securities cash in ($40,000 x 1. 01) coin ($30,000 x 0. 08 x 1/2) investment in Available-for-Sale Securities gratify revenue ($29,100 x 0. 0 x 1/2) bills ($40,000 x 0. 10 x 1/2) investment in Available-for-Sale Securities affaire tax income ($40,400 x 0. 098 x 1/2) $ 430 $ (1,070) 29,100 29,100 1 40,400 1,200 255 40,400 June 30 1,455 2,000 20 1,980 30 15-38 P15-6 (continued) 1. (continued) June 30 registration for interpolate in place of enthronisation unrealised cast up/ drop-off in jimmy of Available-for-Sale Securities 225* 225 additive pitch in moderately set $ (195) 420 $ 225 * pledge $30,000 face value of Bradford Co. bonds $40,000 face value of Morris Co. bonds Totals a$29,100 b$40,400 c$30,000 d$40,000 Amortized 6/30/10 make up mean(a) value a $29,160c $29,355 b 40,800d 40,380 $69,960 $69,735 ost + $255 amortization of discount cost $20 amortization of premium x 0. 972 x 1. 02 1 investment funds in Available-for-Sale Securities notes ($25,000 x 0. 92) quest due ($25,000 x 0. 11 x 5/12) Investment in Available-for-Sale Securities interest taxation ($23,000 x 0. 12 x 5/12) notes ($25,000 x 0. 91) + $1,146 disadvantage on Sale of Available-for-Sale Securities Investment in Available-for-Sale Securities have-to doe with receivable 23,000 July 23,000 Nov. 30 1,146 4 1,150 23,896 254* 23,004 1,146 30 *$23,004 carrying value ($23,000 cost + $4 amortization of discount) $22,750 emergence (excluding interest) 15-39 P15-6 (continued) 1. (continued) Dec. 31 specie ($30,000 x 0. 8 x 1/2) Investment in Avai lable-for-Sale Securities evoke revenue enhancement ($29,355 x 0. 10 x 1/2) hard currency ($40,000 x 0. 10 x 1/2) Investment in Available-for-Sale Securities delight gross ($40,380 x 0. 098 x 1/2) funds ($40,000 x 1. 02) Investment in Available-for-Sale Securities ($40,380 $21) sop up on Sale of Available-for-Sale Securities ($40,800 $40,359) unrealized ontogenesis/ lessening in cherish of Available-for-Sale Securities border for transfigure in repute of Investment (from 6/30/10 schedule) unrealised sum up/ devolve in nurture of Available-for-Sale Securities gross profit for alteration in regard as of Investment 1,200 268 1,468 2,000 21 1,979 40,800 40,359 441 31 31 31 420 420 31 28 628* 12/31/10 fresh assess $28,800b $28,800 accumulative diversity in middling harbor $(823) $(823) * auspices $30,000 face value of Bradford Co. bonds Totals a$29,355 b$30,000 approach $29,623a $29,623 amortized cost (6/30/10) + $268 amortization of discount x 0. 96 = $823 requ ired ending credit balance + $225 beginning (6/30/10) debit balance $420 credit adjustment (12/31/10) $628 credit adjustment 15-40 P15-6 (continued) 2. rice beer revenue dismissal on sale of securities Gain on sale of securities a$1,455 b$1,150 For semiannual end end 12/31/10 6/30/10 a $4,597b $3,435 (254) 441 + $1,980 + $1,468 + $1,979 quietus Sheet As of 06/30/10 12/31/10 $69,753 225 $69,960 $29,623 (823) $28,800 3.Current assets improvised investment in available-for-sale securities (at amortized cost) confirming (Less) stipend for change in value of investment pro tempore investment in available-for-sale securities (at fair value) Stockholders equity compile other encompassing Income unrealized increase (decrease) in value of available-for-sale securities $225 $(823) P15-7 1. 2010 Feb. 3 Investment in Available-for-Sale Securities property (3,000 x $12) Investment in Available-for-Sale Securities vex revenue ($20,000 x 0. 12 x 3/12) capital silver matter to revenue enhancement ($20,000 x 0. 12 x 6/12) Dividend tax (3,000 x $0. 25) 36,000 36,000 Apr. 1 20,000 600 1,950 1,200 750 20,600 June 30 15-41 P15-7 (continued) 1. (continued) Sept. 1 Investment in Available-for-Sale Securities hard cash (4,000 x $22) Investment in Available-for-Sale Securities divert revenue ($30,000 x 0. 11 x 5/12) funds exchange touch on taxation ($30,000 x 0. 11 x 6/12) coin ($30,000 x 1. 1) Investment in Available-for-Sale Securities Gain on Sale of Available-for-Sale Securities ($30,300 $30,000) specie Dividend tax income (3,000 x $0. 25) cash liberation on Sale of Available-for-Sale Securities ($35,300 $36,000) Investment in Available-for-Sale Securities notes wager receipts ($20,000 x 0. 12 x 6/12) security deposit for remove in rate of Investment unfulfilled amplification/ slack in order of Available-for-Sale Securities 88,000 88,000 Nov. 1 30,000 1,375 1,650 1,650 30,300 30,000 300 750 35,300 700 36,000 1,200 1,200 4,200* 4,200 750 31,375 Dec. 1 1 30 30 31 31 15-42 P15-7 (continued) 1. (continued) Cost * bail $20,000 face value of Solomon Co. bonds $ 20,000 4,000 shares of woodworker Corp. ommon stock 88,000 Totals $108,000 a$20,000 b4,000 accumulative 12/31/10 falsify in good quantify somewhat revalue $ 200 $ 20,200a 92,000b 4,000 $112,200 $4,200 x 1. 01 x $23 $2,075 (-$600+$1,200-$1,375+$1,650+$1,200) 1,500 ($750+$750) 300 (700) 2. concern revenue Dividend revenue Gain on sale of securities Loss on sale of securities 3. Current assets transient investment in available-for-sale securities (at cost) summing up valuation account for change in value of investment Temporary investment in available-for-sale securities (at fair value) $108,000 4,200 $112,200 P15-8 Note to instructor This caper contains small cash journal entries and a camber reconciliation, antecedently cover in Chapter 7. 1. 2010 Jan. Investment in Available-for-Sale Securities (150 x $20) + (200 x $30) + (100 x $25) bullion Invest ment in Available-for-Sale Securities ($20,000 + $12,000) raise receipts ($20,000 x 0. 12 x 5/12) + ($12,000 x 0. 10 x 4/12) cash in flyspeck property notes 11,500 11,500 Feb. 1 32,000 1,400 500 33,400 500 1 15-43 P15-8 (continued) 1. (continued) Feb. 28 currency engage revenue $20,000 x 0. 12 x 6/12 postage get down force Supplies get down ecstasy set down unlike expense exchange hard cash utterly and oer hard currency a$125. 50 1,200 1,200 110. 00 170. 65 45. 00 43. 50 5. 35a 28 369. 15 5. 35 28 ($500. 00 $369. 15) 2,100 200 1,500 800 Mar. 31 specie ($1,500 + $600) fire due ($20,000 x 0. 12 x 1/12 A Co. bonds) Dividend revenue amour Revenue ($12,000 x 0. 0 x 6/12) + ($20,000 x 0. 12 x 1/12) unrealised maturation/ slack in nurture of Available-for-Sale Securities gross profit for transpose in jimmy of Investment b$42,600 31 900 900b ($11,500 + $32,000) 140. 00 75. 30 54. 20 31 pestle outgo blot Supplies disbursement sundry(a) Expense intercha nge 269. 50 15-44 P15-8 2. (continued) PAYNE deal assert Reconciliation treat 31, 2010 Balance per depone statement institute Deposits in transit depart great(p) checks familiarised cash balance Balance per company records enlarge Note amass by bank matter to on note recuperate lodge gain charge NSF check returned familiarized cash balance 3. 2010 Mar. 31 immediate payment Notes due Interest Revenue