Chapter 15 Pre-Buil eAlournal E ×YG Information Regard x a Secure | https/ 15 Pr

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Chapter 15 Pre-Buil eAlournal E ×YG Information Regard x a Secure | https/ 15 Pre-Builit Problems 6 Saved Help Save & Exit Submit Check my work Information regarding Carperk Company's individual investments in securities during its calendar-year 2017, along with the December 31, 2017, fair values, follows until they mature in 2022 b investment in Baybridge common stock. 29,500 shares: S305797 cost S332 401 fair value. Carperk owns 32% of Baybridge's voting stock and has a significant influence over Baybridge. c Investment in Buffa common stock: 12,000 shares $157,707 cost $170,008 fair value. This investment amounts s outstanding shares, and Carperk's goal with this investment is to earn dividends over the next few years d. Investment in Newton common stock: 3,500 shares: $87700 cost: $86,209 fair value. Carperk's goal with this investment is to reap an increase in fair value of the stock over the next three to five years. Newton has 30,000 common shares outstanding e. Investment in Farmers common stock: 16.300 shares: $96,163 cost: $102 125 rvalue. This stock is marketable and is held as an investment of cash available for operations Required: 1. Identify whether each investment should be classified as a short-term or long-term investment. For each long- term investment, indicate in which of the long-term investment classifications it should be placed 2. Prepare a journal entry dated December 31, 2017 to record the fair value adjustment of the long-term investments in available-for-sale securities. Carperk had no long-term investments prior to year 2017 Complete this question by entering your answers in the tabs below. Required 1 Required 2 ViewSonic

Explanation / Answer

Solution:

1.

Type of investment Classification of long-term investment

a. Long-term investment Held-to-maturity debt securities

b. Long-term investment Equity securities

c. Long-term investment Available for sale equity securities

d. Long-term investment Available for sale equity securities

e. Short-term investment None

2. Fair value adjustment - Available for sale (LT) ............14,303

Unrealized gain - equity .......................................... 14,303

305,797 - 157,707 = 148,090

332,401 - 170,008 = 162,393

Fair value = 162,393 - 148,090 = 14,303

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