Investments in Available-for-Sale Securities Lindorf Company often purchases common stocks of other companies as long-term investments.

At the end of 2008, Lindorf held the common stocks listed. (Assume that Lindorf Company exercises no significant influence over these companies; that is, they are classified as available-for-sale securities.)

Additional information for 2008:
Sept. 30 Lindorf received a cash dividend of $1.15 per share on Corporation A stock.
Dec. 31 The market prices were quoted as follows:
Corporation A stock, $35; Corporation B stock, $28;
Corporation C stock, $154; Corporation D stock, $70.
Required:
1. Illustrate how these investments would be reported on the balance sheet at December 31, 2008, and prepare the adjusting entry at that date.
2. What items and amounts would be reported on the income statement for 2008?
3. Prepare the journal entry for the sale of Corporation D stock for $71 per share in 2009.
4. Interpretive Question: Why are losses from the write-down of available-for-sale securities not included in the current year’s income, whereas similar losses for trading securities are included?

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Corporation A 2,500 B 2,000 Number of Shares Cost per Share $ 40 26 2,300 153 D 750 75