Stoll Co \'s long-term available-for-sale portfollo at December 31, 2014, consis
ID: 2564908 • Letter: S
Question
Stoll Co 's long-term available-for-sale portfollo at December 31, 2014, consists of the following. Available-for-Sale Securties Cost Fair Value 40,000 shares of Company A common stock 7,000 shares of Company B common stock 17,500 shares of Company C common stock $535,300 s 490,000 159,380 154,000 662,750 640,938 Stoll enters into the following long-term Investment transactions during year 2015 Jan. 29 Sold 3,500 shares of Company B common stock for $79,188 less a brokerage fee of $1,500. Apr. 17 Purchased 10,000 shares of Company W common stock for $197,500 plus a brokerage fee of July 6 Purchased 4,500 shares of Company X common stock for $126,562 plus a brokerage fee of $1.750 Aug 22 Purchased 50,000 shares of Company Y common stock for $375.000 plus a brokerage fee of Nov. 13 Purchased 8,500 shares of Company Z common stock for $267,900 plus a brokerage fee of Dec. 9 Sold 40,000 shares of Company A common stock for $515.000 less a brokerage fee of $4,100. $2400. The shares represent a 30% ownership in Company The shares represent a 10% ownership in Company X. $1.200. The shares represent a 51% ownership in Company Y $2450. The shares represent a 5% ownership in Company The fair values of Its investments at December 31, 2015, are: Fair Value 81,375 C $ 610,312 W S191.250 118,125 YS 531.250 Z $ 278.800Explanation / Answer
Solution:
1&2) Determining the Amount Stoll Should Report on its Decemeber 31, 2015 Balance Sheet for its Long - Term Investments in Available for Sale Securities:
December 31, 2015, adjustment to the Fair Value Adjustment account:
Preparing the Journal Entry to Record the Year-End Adjusting Entry for the Securities Portfolio as fo December 31, 2015:
Fair Value Adjustment Computation Available for Sale Securities December 31, 2015 AFS Securities # of shares Cost Fair Value Unrealized Amount Gain or Loss Company B common stock 3,500 $79,690 $81,375 Company C common stock 17,500 $662,750 $610,312 Company X common stock 4,500 $128,312 $118,125 Company Z common stock 8,500 $270,350 $278,800 Total $1,141,102 $1,088,612 $52,490 Loss Required December 31, 2015 Balance in the Fair Value Adjustment account $52,490 Credit December 31, 2014 Balance in the Fair Value Adjustment account $72,492 Credit December 31, 2015 required adjustment to the Fair Value Adjustment account $20,002 Credit Fair Value Adjustment(AFS) Balance 12/31/2014 $72,492 12/31/2015 Adjustment $20,002 Balance 12/31/2015 $52,490