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Cleveland Company has a stock portfolio valued at $4,000. Its cost was $3,300. If the Fair Value Adjustment account has a debit balance of $200,
Cleveland Company has a stock portfolio valued at $4,000. Its cost was $3,300. If the Fair Value Adjustment account has a debit balance of $200, prepare the journal entry at year-end.
E16-1. (Investment Classifications) For the following investments, identify whether they are:
- Trading debt securities.
- Available-for-sale debt securities.
- Held-to-maturity debt securities.
- None of the above.
Each case is independent of the other.
- A bond that will mature in 4 years was bought 1 month ago when the price dropped. As soon as the value increases, which is expected next month, it will be sold.
- 10% of the outstanding stock of Farm-Co was purchased. The company is planning on eventually getting a total of 30% of its outstanding stock.
- Bonds were purchased in December of this year. The bonds are expected to be sold in January of next year.
- Bonds that will mature in 5 years are purchased. The company would like to hold them until they mature, but money has been tight recently and they may need to be sold.
- Preferred stock was purchased for its constant dividend. The company is planning to hold the preferred stock for a long time.
- A bond that matures in 10 years was purchased. The company has committed the money for an expansion project planned 10 years from now.
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