Blue accounts for the yellow investment as available

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Unformatted text preview: eginning of 2013. Required: In early December of 2013, Blue Corp. purchased $40,000 of Yellow Company common stock, which constitutes less than 3% of Yellow's outstanding shares. Blue accounts for the Yellow investment as available for sale. By December 31, 2013, the value of the Yellow investment had fallen to $30,000, and Blue recorded an unrealized loss. By December 31, 2014, the value of the Yellow investment had fallen to $15,000, and Blue determined that it can no longer assert that it has both the intent and ability to hold the shares long enough for their fair value to recover, so Blue recorded an OTT impairment. By December 31, 2015, fair value had recovered to $20,000. 172.Prepare appropriate entry(s) at December 31, 2013, and indicate how the scenario will affect net income, OCI, and comprehensive income. 173.Prepare appropriate entry(s) at December 31, 2014, and indicate how the scenario will affect net income, OCI, and comprehensive income. 174.Prepare appropriate entry(s) at December 31, 2015, and indicate how the scenario will affect net income, OCI, and comprehensive income. 175.For each investment, indicate: (a) the accounting approach that will be used to account for the investment, and briefly explain why that approach is appropriate, and (b) the effect on earnings of an increase in the fair value of the investment in the period following acquisition of the investment, assuming that Stanhope does not sell the investment. You may group the specific investments if they have the same answers. Identify the investments you are including in the group. Respond to the following question with the presumption that the guidance provided by the new Accounting Standards Update is being applied. Stanhope Associates holds the following investments: 1. 10 shares of Blackstone equity, held for long-term investment. 2. 10 shares of Erickson equity, held for risk management. 3. 10 shares of AT&E equity, held for immediate resale. 4. 10 bonds issued by Filo Inc., held for long-term investment. 5. 10 bonds of SimSung, held for risk management. 6. 10 bonds issued by Attachi, held for imme...
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This document was uploaded on 07/05/2013.

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