Analysis Component

1. Explain the balance sheet presentation of the fair value adjustment for Rose's short-term investment.

2. How do these short-term stock investment affect Rose's (a) income statement for this year and (b) the equity section of its balance sheet at this year-end?

Rose Company had no short-term investments prior to this year. It had the following transactions this year involving short-term stock investments with insignificant influence. Apr. July Aug. 16 Purchased 3,500 shares of Gem Co. stock at $24 per share. 7 Purchased 2,000 shares of PepsiCo stock at $49 per share. 20 Purchased 1,000 shares of Xerox stock at $16 per share. 15 Received a $1.00 per share cash dividend on the Gem Co. stock. 28 Sold 2,000 shares of Gem Co. stock at $30 per share. 1 Received a $2.50 per share cash dividend on the PepsiCo shares. 15 Received a $1.00 per share cash dividend on the remaining Gem Co. shares. 31 Received a $1.50 per share cash dividend on the PepsiCo shares. Oct. Dec