On Jan. 1, 2020, you made two investments, one in Co. A and the other in Co. B.

Required:

1. Assume you invest in Co. A and Co. B debt at face value and classify your investments as available for sale. Determine dollar amounts for each of the following. For balances, label the amount as either a “debit” or “credit” balance. For income effects, indicate an increase as a “+” (plus) and a decrease as a “–“ (minus). Note that Cost, NI, Interest Paid, FMV, and Selling Price are the amounts related to your specific holdings. First row is Co. A. Second row is Co. B.

Year 1 Year 2

Interest Dec. 31 Selling Interest Dec. 31

Cost NI Paid FMV Price NI Paid FMV

22600	3500	560	12540	19000	0	0	0
39900	7650	1170	45930	0	3090	540	53310

a. The balance in the combined Investment in account is:

End of Yr. 1 ____________________________ End of Yr. 2_______________________________

b. The balance in the combined Fair Value Adjustment account is:

End of Yr. 1____________________________ End of Yr. 2______________________________

c. The balance in the combined Unrealized Loss (Gain) account in AOCI is:

End of Yr. 1____________________________ End of Yr. 2_____________________________

d. The effect of these investments on net income is:

Yr. 1__________________________________ Yr. 2____________________________________

2. Assume you invest in Co. A and Co. B equity with both investments accounted for using the Equity Method. Determine dollar amounts for each of the following. For balances, label the amount as either a “debit” or “credit” balance. For income effects, indicate an increase as a “+” (plus) and a decrease as a “–“ (minus). Note that Cost and Selling Price are the amounts related to your specific holdings. However, NI, Dividends Paid, and

FMV are the totals reported by each company for that year. First row is Co. A. Second row is Co. B.

Year 1 Year 2

Dividends Dec. 31 Selling Dividends Dec. 31

% Own Cost NI Paid FMV Price NI Paid FMV

20%	$22,600	$17,500	$2,800	$62,700	$19,000	0	0	0
30%	39,900	25,500	3,900	153,100	0	10,300	1,800	177,700

a. The balance in the combined Investment in account is:

End of Yr. 1_____________________________ End of Yr. 2_____________________________

b. The effect of these investments on net income is:

Yr. 1___________________________________ Yr. 2_________________________________