At December 31, 2016, the investments in securities available-for-sale of Beale

Question

At December 31, 2016, the investments in securities available-for-sale of Beale Developments were reported at $98 million:

     During 2017, Beale sold its investment in Schwab Pharmaceuticals, which had cost $44 million, for $49 million. Those shares had a fair value at December 31, 2016, of $48 million. No other investments were sold. At December 31, 2017, the investments in securities available-for-sale included the cost and fair value amounts shown below.

At what amount should Beale report its securities available-for-sale in its December 31, 2017, balance sheet? (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

What journal entry is needed to enable the investment to be reported at this amount? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

At December 31, 2016, the investments in securities available-for-sale of Beale Developments were reported at $98 million:

Explanation / Answer

Security are classified into 3 types-:

1. Held to maturity

2. Available for sale

3. Held for trading.

Available for sale is debt or equity security is purchased with the intent . of selling before its maturity or prior to that period in case security does not have maturity. It is reported at fair value.

So Beatle is valued its securities at its fair value.

Daisy theaters at $ 60

Orpheum entertainment bonds $33.

Part 2

When securities are adjusted to its fair value at year end date then if it is gain then securities are available for sale is debited and unrealised gain from securities are credited and if there is loss then entry loss debuted secuties available for sale is credited

So in present problem there is profit so entry would be

Securities available for sale dr $9

Unrealized gain on available for sale cr $ 9

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