Stoll Co.’s long-term available-for-sale portfolio at December 31, 2014, consist

Question

Stoll Co.’s long-term available-for-sale portfolio at December 31, 2014, consists of the following.

Determine the amount Stoll should report on its December 31, 2015, balance sheet for its long-term investments in available-for-sale securities. and Prepare any necessary December 31, 2015, adjusting entry to record the fair value adjustment for the long-term investments in available-for-sale securities.

Stoll Co.'s long-term available-for-sale portfolio at December 31, 2014, consists of the following Available-for-Sale Securities 40,000 shares of Company A common stock 30,000 shares of Company B common stoclk 35,000 shares of Company C common stock Cost Fair Value $1,040,600 $ 930,000 330,000O 1,314,875 340,750 1,364,000 Stoll enters into the following long-term investment transactions during year 2015 29 Sold 15,000 shares of Company B common stock for $169,375 less a brokerage fee of $3,500 $3.200. The shares represent a 30% wnership in Company W $3.200. The shares represent a 10% wnership in Company X. $8,000. The shares represent a 51% ownership in Company Y $6,000. The shares represent a 5% ownership in Company Z Jan. Apr. 17 Purchased 21,000 shares of Company W common stock for $450,000 plus a brokerage fee of July 6 Purchased 9,000 shares of Company X common stock for $258,625 plus a brokerage fee of Aug. 22 Purchased 100,000 shares of Company Y common stock for $600,000 plus a brokerage fee of Nov. 13 Purchased 13,000 shares of Company Z common stock for $528,300 plus a brokerage fee of Dec. 9 Sold 40,000 shares of Company A common stock for $1,028,000 less a brokerage fee of $4,100 The fair values of its investments at December 31, 2015, are Fair Value B $ 168,250 C $1,226,125 W $ 388,000 X $ 241,750 Y $ 1,068,000 Z $563,10O

Explanation / Answer

Stoll co's AFS securities portfolio at Dec 31,2014 Cost Fair value Diff. 40000 shares of company A common stock 1040600 930000 30000 shares of company B common stock 340750 330000 35000 shares of company C common stock 1364000 1314875 Total 2745350 2574875 170475 AFS securities should be reported at fair value as $2574875 Diff of $ 2745350-2574875=170475 should be debited to Unrealized gain/loss-OCI account Jan.29 Sold 15000 shares of common stock B Carriying amount (330000*1/2) 165000 Add:Unrealised loss from OCI (10750*1/2) 5375 170375 Less:Net proceeds (169375-3500) 165875 Net loss 4500 To income statement Carriying amount for balance common stock=165000 Apr.17 An investment of 20% to 50% requires equity method andcant be considered as AFS. Jul.6 This is an AFS security Carriying value=258625+3200=261825 Aug .22 An investment of 51% make it as a holding company.Hence not an AFS security. Nov.13 This is an AFS security Carriying value=528300+6000=534300 Dec.9 Sold 40000 shares of common stock A Carriying amount 930000 Add:Unrealised loss from OCI 110600 1040600 Less:Net proceeds (1028000-4100) 1023900 Net loss 16700 To income statement Stoll co's AFS securities portfolio on Dec 31,2015 Cost Fair value Diff. 15000 shares of company B common stock 165000 168250 35000 shares of company C common stock 1314875 1226125 9000 shares of company C common stock 261825 241750 13000 shares of company Z common stock 534300 563100 2276000 2199225 76775 Adjusting entry: Date Account titles Debit Credit 31-Dec Unrealised loss-OCI 76775 Investment in AFS Securities 76775 (Fair value adjustment for AFS Securities) Loss to be reported in income statement=4500+16700=21200

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