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Instructions a prepare the adjusting entries to

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Instructions(a)Prepare the adjusting entries to report each class of securities at fair value.(b)Indicate the statement presentation of each class of securities and the related unrealizedgain (loss) accounts.Ans: N/A, LO: 3, Bloom: AP, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC:Problem Solving, IMA: FSASolution 189(5 min.)(a)Fair Value Adjustment—Trading($199,000 – $110,000)........................................................9,000Unrealized Gain or Loss—Income..............................9,000Unrealized Gain or Loss—Equity..............................................5,000*Fair Value Adjustment—Available-for-Sale..........................5,000*(AFS cost – AFS fair val.)FOR INSTRUCTOR USE ONLYH-57
Test Bank for Financial Accounting: Tools for Business Decision Making, Eighth EditionSolution 189(Cont.)(b)Balance SheetCurrent AssetsShort-term Investments, at fair value...................................$119,000InvestmentsLong-term Investments, at fair value...................................95,000Stockholders' equityLess: Unrealized loss on available-for-sale securities.........$ (5,000)Income StatementOther revenues and gainsUnrealized gain—income....................................................$9,000COMPLETION STATEMENTS190.Excess cash due to seasonal fluctuations is invested in ______________ investments.Ans: N/A, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: ProjectManagement, IMA: Investment Decisions191.Debt investments are investments in government and _____________ bonds.Ans: N/A, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA:Investment Decisions192.When an investor owns between 20% and 50% of the common stock of a corporation, itis generally presumed that the investor has _______________ influence over theinvestee and therefore, the appropriate method of accounting for this type of investmentis the _______________ method.Ans: N/A, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA:Investment Decisions193.Under the cost method, dividends received from an investee company are credited to the_______________ account, whereas under the equity method, dividends received froman investee company are credited to the _______________ account.Ans: N/A, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None,IMA: FSA194.At the beginning of the year, Dynamite Corporation acquired 15% of Tuesday Companycommon stock for $600,000. Tuesday Company reported net income for the year of$60,000 and paid $20,000 cash dividends during the year. The balance of the StockInvestments account on the books of the Dynamite Corporation at the end of the yearshould be $______________.Ans: N/A, LO: 2, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC:Problem Solving, IMA: Reporting195.A company that owns more than 50% of the common stock of another company is knownas the ______________ company and _____________ financial statements are usuallyprepared.

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Term
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