[经济学]IntermediateAccounting

1、.Exercise 12-1Requirement 1 ($ in millions)Investment in bonds (face amount) 240.0Discount on bond investment (difference) 40.0Cash (price of bonds) 200.0Requirement 2 Cash (3% x $240 million) 7.2Discount on bond investment (difference).8Interest revenue (4% x $200) 8.0Requirement 3 Tanner-UNF repor

2、ts its investment in the December 31, 2020, balance sheet at its amortized cost that is, its book value:Investment in bonds$240.0Less: Discount on bond investment ($40 .8 million) 39.2Amortized cost$200.8If sale before maturity isnt an alternative, increases and decreases in the market value between

3、 the time a debt security is acquired and the day it matures to a prearranged maturity value are relatively unimportant. For this reason, if an investor has the “positive intent and ability” to hold the securities to maturity, investments in debt securities are classified as “held-to-maturity” and r

4、eported at amortized cost rather than fair value in the balance sheet.Requirement 4 ($ in millions)Cash (proceeds from sale)190.0Discount on bond investment (balance, determined above)39.2Loss on sale of investments (to balance)10.8Investment in bonds (face amount)240.0Exercise 12-2November 1 ($ in

5、millions)Cash2.4Investment revenue2.4December 1 Investment in Facsimile Enterprises bonds30 Cash30 December 31 Investment in U.S. Treasury bills 8.9Cash8.9December 31 Investment revenue receivableConvenience bonds ($48 million x 10% x 2/12)0.8Investment revenue receivableFacsimile Enterprises bonds

6、($30 million x 12% x 1/12)0.3Investment revenue 1.1Note: Securities held-to-maturity are not adjusted to fair value.Exercise 12-3Investment in GM common shares 41,200Cash (800 shares x $50 + $1,200)41,200Cash (800 shares x $53 $1,300)41,100Loss on sale of investments100Investment in GM common shares

7、 41,200Exercise 12-4Requirement 1 2020December 17Investment in Grocers Supply preferred shares 350,000Cash350,000December 28Cash2,000 Investment revenue2,000 December 31Fair value adjustment50,000Net unrealized holding gains and lossesI/S ($4 x 100,000 shares $350,000)50,0002021January 5Cash (sellin

8、g price)395,000Gain on investments (to balance)45,000Investment in Grocers Supply preferred shares (account balance)350,000 Assuming no other trading securities, the 2021 adjusting entry to remove the fair value adjustment associated with the sold securities would be:December 31Net unrealized holdin

9、g gains and lossesI/S50,000Fair value adjustment (account balance)50,000Exercise 12-4 (concluded)Requirement 2 Balance Sheet(short-term investment):Trading securities$400,000Income Statement:Investment revenue (dividends) $ 2,000Net unrealized holding gains and losses (from adjusting entry)50,000Not

10、e: Unlike for securities available-for-sale, unrealized holding gains and losses for trading securities are included in income.Exercise 12-5Requirement 1 . Net unrealized holding gains and lossesOCI25,000Fair value adjustment ($45,000 20,000)25,000Requirement 2 None. Accumulated net holding gains an

11、d losses for securities available-for-sale are reported as a component of shareholders equity (in accumulated other comprehensive income), and changes in the balance are reported as other comprehensive income or loss in the statement of comprehensive income rather than as part of earnings. This stat

12、ement can be reported either (a) as an extension of the income statement, (b) as part of the statement of shareholders equity, or (c) as a separate statement in a disclosure note.Exercise 12-6Requirement 1 Securities “held-to-maturity” are debt securities that an investor has the “positive intent an

13、d ability” to hold to maturity. Actively traded investments in debt or equity securities acquired principally for the purpose of selling them in the near term are classified as “trading securities.” The IBM shares are neither. They are classified as “available-for-sale” since all investments in debt

14、 and equity securities that dont fit the definitions of the other reporting categories are classified this way. Of course, the equity method isnt appropriate either because 10,000 shares of IBM certainly dont constitute “significant influence.”Investments in securities available-for-sale are reporte

15、d at fair value, and holding gains or losses are not included in the determination of income for the period. Instead, they are reported as other comprehensive income or loss in the statement of comprehensive income. This statement can be reported either (a) as an additional section of the income sta

16、tement, (b) as part of the statement of shareholders equity, or (c) as a separate statement in a disclosure note. Accumulated net holding gains and losses for securities available-for-sale are reported as a separate component of shareholders equity in the balance sheet. Requirement 2 December 31, 20

17、20Net unrealized holding gains and lossesOCI (10,000 shares x $58 60) 20,000 Fair value adjustment 20,000Exercise 12-6 (concluded)Requirement 3 December 31, 2021Accumulated ($ in 000s)UnrealizedAvailable-for-Sale SecuritiesCostFair ValueGain (Loss)IBM shares Dec. 31, 2021$600$610$10Moving from a neg

18、ative $20 (2020) to a positive $10 (2021) requires an increase of $30:Fair Value AdjustmentBalance needed in fair value adjustment$10Existing balance in fair value adjustment:($20) Increase (decrease) needed in fair value adjustment:$30-200+10+30 -> Fair value adjustment 10,000 shares x $61 58)30

19、,000Net unrealized holding gains and lossesOCI (-$20 less $10)30,000Exercise 12-7Requirement 1 2020March 2($ in millions)Investment in Platinum Gauges, Inc. shares 31Cash31April 12Investment in Zenith bonds20Cash20July 18Cash2Investment revenue2October 15Cash1Investment revenue1October 16 Cash21Inve

20、stment in Zenith bonds20Gain on sale of investments1November 1Investment in LTD preferred shares 40Cash40Exercise 12-7(continued)December 31Accumulated ($ in millions)UnrealizedAvailable-for-Sale SecuritiesCostFair ValueGain (Loss)Platinum Gauges, Inc. shares$31$32*$1LTD preferred shares 40 37* (3)

21、Totals$71$69$(2)* $32 x 1 million shares * $74 x 500,000 shares Adjusting entry: Net unrealized holding gains and lossesOCI ($71 69)2Fair value adjustment ($71 69)22021January 23($ in millions)Cash (1 million shares x 1/2 x $32)16.0Gain on sale of investments (difference)0.5Investment in Platinum Ga

22、uges shares ($31 million cost x 1/2)15.5March 1Cash ($76 x 500,000 shares)38Loss on sale of investments (difference)2Investment in LTD preferred (cost)40Note: As part of the process of recording the normal, period-end fair value adjusting entry at 12/31/2021, Construction would debit Fair value adju

23、stment and credit Net unrealized gains and lossesOCI for the $2.5 million associated with the sold investments to remove their effects from the financial statements. (Construction sold only half the Platinum investments so only half of the Platinum fair value adjustment should be removed. The 2.5 am

24、ount comes from 3.0 LTD - 0.5 Platinum.)Exercise 12-7 (concluded)Requirement 2 2020 Income Statement ($ in millions)Investment revenue (from July 18; Oct. 15)$3Gain on sale of investments (from Oct. 16)1Other comprehensive income:*Net unrealized holding gains and losses on investments*$2* Assuming C

25、onstruction Forms chooses to report Other comprehensive income as an additional section of the income statement. Alternatively, it can report this (a) as part of the statement of shareholders equity or (b) as a separate statement in a disclosure note.Note: Unlike for trading securities, unrealized h

26、olding gains and losses are not included in income for securities available-for-sale. Rather, they are included in other comprehensive income, and accumulated in shareholders equity in accumulated other comprehensive income.Exercise 12-8Requirement 1 Purchase($ in millions)Investment in Jackson Indu

27、stry shares90Cash 90Net incomeNo entryDividendsCash (5% x $60 million)3Investment revenue3Adjusting entryFair value adjustment ($98 90 million)8Net unrealized holding gains and lossesOCI8Requirement 2 Investment revenue$3 millionNote: An unrealized holding gain is not included in income for securiti

28、es available-for-sale. Rather, it is included in other comprehensive income, and accumulated in shareholders equity in accumulated other comprehensive income.Exercise 12-91.Investments reported as current assets.SecurityA$ 910,000SecurityB100,000SecurityC780,000Security E 490,000 Total$2,280,0002.In

29、vestments reported as noncurrent assets.SecurityD$ 915,000Security F 615,000$1,530,0003.Unrealized gain (or loss) component of income before taxes.Trading Securities:Cost Fair value Unrealized gain (loss)SecurityA$ 900,000$ 910,000$10,000B 105,000 100,000 (5,000)Totals$1,005,000$1,010,000$ 5,0004.Un

30、realized gain (or loss) component of AOCI in shareholders equity.Securities Available-for-Sale:Cost Fair value Unrealized gain (loss)Security C$ 700,000$ 780,000$80,000D 900,000 915,000 15,000Totals$1,600,000$1,695,000$95,000Exercise 12-10Requirement 1 Accumulated ($ in 000s)UnrealizedAvailable-for-

31、Sale SecuritiesCostFair ValueGain (Loss)IBM shares Dec. 31, 2020$1,345$1,175$(170)Moving from a negative $145 (Jan.1) to a negative $170 requires a reduction of $25:Fair Value AdjustmentBalance needed in fair value adjustment($170)Existing balance in fair value adjustment:($145) Increase (decrease)

32、needed in fair value adjustment:($ 25)-170-1450 <- 25 Net unrealized holding gains and lossesOCI25,000Fair value adjustment ($1,175,000 1,200,000)25,000Exercise 12-10 (continued)Requirement 2 Accumulated ($ in 000s)UnrealizedAvailable-for-Sale SecuritiesCostFair ValueGain (Loss)IBM shares Dec. 31

33、, 2020$1,345$1,275$(70)Moving from a negative $145 (Jan.1) to a negative $70 requires an increase of $75:Fair Value AdjustmentBalance needed in fair value adjustment($ 70)Existing balance in fair value adjustment:($145) Increase (decrease) needed in fair value adjustment:$ 75-145-700+75 -> Fair v

34、alue adjustment ($1,275,000 1,200,000) 75,000Net unrealized holding gains and lossesOCI75,000Exercise 12-10 (concluded)Requirement 3 Accumulated($ in 000s)UnrealizedAvailable-for-Sale SecuritiesCostFair ValueGain (Loss)IBM shares Dec. 31, 2020$1,345$1,375$30Moving from a negative $145 (Jan.1) to a p

35、ositive $30 requires an increase of $175:Fair Value AdjustmentBalance needed in fair value adjustment$ 30Existing balance in fair value adjustment:($145) Increase (decrease) needed in fair value adjustment:$175-145-700+30+175 -> Fair value adjustment ($1,375,000 1,200,000) 175,000Net unrealized h

36、olding gains and lossesOCI175,000Exercise 12-11Requirement 1The sale of the A Corporation shares decreased Harlons pretax earnings by $5 million. The purchase of the C Corporation shares had no effect on Harlons 2021 earnings (because the shares are classified as available-for-sale investments, any

37、unrealized gains or losses occurring after purchase during 2021 would not affect 2021 earnings). Here are the entries used to record those two transactions:June 1, 2021($ in millions)Cash15 Loss on sale of investments (difference)5Investment in A Corporation shares (cost)20September 12, 2021Investme

38、nt in C Corporation shares15Cash15Exercise 12-11 (concluded)Requirement 2Harlons securities available-for-sale portfolio should be reported in its 2021 balance sheet at its fair value of $101 million:December 31, 2021($ in millions)Cost, Dec. 31Fair Value, Dec. 31 Securities Available-for-Sale202020

39、2120202021A Corporation shares$20na$14naB Corporation bonds35$3535$ 37C Corporation sharesna15na14D Industries shares 45 45 46 50 Totals$100$95$95$101In 2020, Harlon would have had a net unrealized loss of $5 (cost of $100 fair value of $95). Moving from a negative $5 (2020) to a positive $6 require

40、s an increase of $11:Fair Value Adjustment AllowanceBalance needed in fair value adjustment$ 6Existing balance in fair value adjustment:(5) Increase (decrease) needed in fair value adjustment:$11-50+6+11 -> Fair value adjustment ($5 credit to $6 debit)11Net unrealized holding gains and lossesOCI1

41、1The adjustment has no effect on earnings. Unlike for trading securities, unrealized holding gains and losses are not included in income for securities available-for-sale. Rather, they are included in other comprehensive income, and accumulated in shareholders equity in accumulated other comprehensi

42、ve income.Exercise 12-12Requirement 1 The investment would be accounted for as an available-for-sale investment:PurchaseInvestment in AMC common shares480,000Cash 480,000Net incomeNo entryDividendsCash (20% x 400,000 shares x $0.25)20,000Investment revenue20,000Adjusting entryFair value adjustment (

43、$505,000 480,000)25,000Net unrealized holding gains and lossesOCI25,000Requirement 2 The investment would be accounted for using the equity method:PurchaseInvestment in AMC common shares480,000Cash 480,000Net incomeInvestment in AMC common shares (20% x $250,000) 50,000Investment revenue50,000Divide

44、ndsCash (20% x 400,000 shares x $0.25)20,000Investment in AMC common shares20,000Adjusting entryNo entryExercise 12-13Purchase($ in millions)Investment in Nursery Supplies shares56 Cash 56 Net incomeInvestment in Nursery Supplies shares (30% x $40 million) 12Investment revenue12DividendsCash (30% x

45、8 million shares x $1.25)3Investment in Nursery Supplies shares3Adjusting entryNo entryExercise 12-14Requirement 1 ($ in millions)Investment in equity securities ($48 million 31 million)17Retained earnings (investment revenue from the equity method)17Requirement 2 Financial statements would be recas

46、t to reflect the equity method for each year reported for comparative purposes. A disclosure note also should describe the change, justify the switch, and indicate its effects on all financial statement items.Requirement 3 When a company changes from the equity method, no adjustment is made to the c

47、arrying amount of the investment. Instead, the equity method is simply discontinued, and the new method is applied from then on. The balance in the investment account when the equity method is discontinued would serve as the new “cost” basis for writing the investment up or down to fair value in the

48、 next set of financial statements. There also would be no revision of prior years, but the change should be described in a disclosure note.Exercise 12-15Requirement 1: Error discovered before the books are adjusted or closed in 2020.The journal entry the company made is:Cash100,000Investments100,000

49、The journal entry the company should have made is:Cash100,000Investments80,000Gain on sale of investments ($100,000 80,000)20,000Therefore, to get from what was done to what should have been done, the following entry is needed:Investments ($100,000 80,000)20,000Gain on sale of investments20,000Requi

50、rement 2: Error not discovered until early 2021. Investments ($100,000 80,000)20,000Retained earnings20,000Exercise 12-16Purchase($ in millions)Investment in Carne Cosmetics shares68 Cash 68 Net incomeInvestment in Carne Cosmetics shares (25% x $40 million) 10Investment revenue10DividendsCash (4 mil

51、lion shares x $1)4Investment in Carne Cosmetics shares4Depreciation AdjustmentInvestment revenue ($8 million calculation below ÷ 8 years)1Investment in Carne Cosmetics shares1Calculations:InvesteeNet AssetsDifferenceNet AssetsPurchasedAttributed to:ßßßCost$68ýGoodwill:$12 Fa

52、ir value:$224* x 25% =$56 ýUndervaluationBook value:$192 x 25% =$48of assets:$8 *$192 + 32 = $224Adjusting entryNo entry to adjust for changes in fair value as this investment is accounted for under the equity method.Exercise 12-17Requirement 1 Purchase($ in millions)Investment in Lake Construction