Anderson Corp.: Case Study
Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition SOLUTION TO ASSIGNMENT #4 – COMM 3111
PROBLEM 9-4 (a) Investments (FV-OCI)—December 31, 2014
Securities Cost
Fair
Value
Anderson Corp.
Munter Ltd.
King Corp.
Total of portfolio
$48,750
580,000 255,000
$883,750
$49,580 569,500 254,400
$873,480
Note: Balance in AOCI, December 31, 2014 = $10,270 debit ($873,480 – $883,750) since all securities were purchased in 2014. The Anderson shares make up $49,580 - $48,750 = $830 credit of this. Sale of Anderson shares, January 15, 2015: Gross selling price of 2,500 shares at $21 $52,500 Less fees (2,150 ) Net proceeds from …show more content…
The holding gain since December 31, 2014 = $50,350 – $49,580 = $770. January 15, 2015 FV-OCI Investments 770 Unrealized Gain or Loss - OCI 770 Cash 50,350 FV-OCI Investments. 50,350 Unrealized Gain or Loss - OCI 1,600 Retained Earnings 1,600
(Proof of reclassification amount: $830 + $770 = $1,600) PROBLEM 9-4 (Continued) (b) The total purchase price is: (1,000 X $33.50) + $1,980 = $35,480. The purchase entry will be: April 17, 2015 FV-OCI Investments 35,480 Cash 35,480 (c) Investments (FV-OCI)—December 31, …show more content…
PROBLEM 9-4 (Continued) (d) Reporting of FV-OCI Investments Statement of Financial Position, December 31, 2015 Long-term Investments (assumed) Investments, at fair value with gains and losses in OCI $ 879,000 Shareholders’ Equity Accumulated other comprehensive income (credit) $8,520 Statement of Comprehensive Income, Year Ended Dec. 31, 2015 Net income (including any dividend income on shares) $ x Other comprehensive income- items that will not be reclassified to net income: Holding gains on FV-OCI investments during year ($770 + $19,620) $20,390 Reclassification adjustment for realized gains transferred to Retained Earnings (1,600 ) Other comprehensive income 18,790 Comprehensive income $ x + 18,790 Statement of Changes in Accumulated Other
Comprehensive Income, Year Ended Dec. 31, 2015 Accumulated other comprehensive income
PROBLEM 9-4 (a) Investments (FV-OCI)—December 31, 2014
Securities Cost
Fair
Value
Anderson Corp.
Munter Ltd.
King Corp.
Total of portfolio
$48,750
580,000 255,000
$883,750
$49,580 569,500 254,400
$873,480
Note: Balance in AOCI, December 31, 2014 = $10,270 debit ($873,480 – $883,750) since all securities were purchased in 2014. The Anderson shares make up $49,580 - $48,750 = $830 credit of this. Sale of Anderson shares, January 15, 2015: Gross selling price of 2,500 shares at $21 $52,500 Less fees (2,150 ) Net proceeds from …show more content…
The holding gain since December 31, 2014 = $50,350 – $49,580 = $770. January 15, 2015 FV-OCI Investments 770 Unrealized Gain or Loss - OCI 770 Cash 50,350 FV-OCI Investments. 50,350 Unrealized Gain or Loss - OCI 1,600 Retained Earnings 1,600
(Proof of reclassification amount: $830 + $770 = $1,600) PROBLEM 9-4 (Continued) (b) The total purchase price is: (1,000 X $33.50) + $1,980 = $35,480. The purchase entry will be: April 17, 2015 FV-OCI Investments 35,480 Cash 35,480 (c) Investments (FV-OCI)—December 31, …show more content…
PROBLEM 9-4 (Continued) (d) Reporting of FV-OCI Investments Statement of Financial Position, December 31, 2015 Long-term Investments (assumed) Investments, at fair value with gains and losses in OCI $ 879,000 Shareholders’ Equity Accumulated other comprehensive income (credit) $8,520 Statement of Comprehensive Income, Year Ended Dec. 31, 2015 Net income (including any dividend income on shares) $ x Other comprehensive income- items that will not be reclassified to net income: Holding gains on FV-OCI investments during year ($770 + $19,620) $20,390 Reclassification adjustment for realized gains transferred to Retained Earnings (1,600 ) Other comprehensive income 18,790 Comprehensive income $ x + 18,790 Statement of Changes in Accumulated Other
Comprehensive Income, Year Ended Dec. 31, 2015 Accumulated other comprehensive income