Exercise 15-15

a. Investment in Brava Company bonds: $440,750 cost; $479,095 fair value. Carperk intends to hold these bonds until they mature in 5 years. b. Investment in Baybridge common stock: 29,500 shares; $350,396 cost; $380,880 fair value. Carperk owns 32% of Baybridge's voting stock and has a significant influence over Baybridge. c. Investment in Duffa bonds: $180,708 cost; $194,803 fair value. This investment is not readily marketable and is not classified as held-to-maturity or trading. d. Investment in Newton notes: $100,491 cost; $98,783 fair value. Newton notes are not readily marketable and are not classified as held-to-maturity or trading. e. Investment in Farmers common stock: 16,300 shares: $110,188 cost; $117,020 fair value. This stock is marketable, and Carperk intends to sell it within the year. This stock investment results in Carperk having an insignificant influence over Farmers. Required: 1. Identify whether each investment should be classified as a short-term or long-term investment. For each investment, indicate in which of the six investment classifications it should be placed. 2. Prepare a journal entry dated December 31 to record the fair value adjustment for the portfolio of available-for-sale debt securities. Carperk had no available-for-sale debt securities prior to this year. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a journal entry dated December 31 to record the fair value adjustment for the portfolio of available-for-sale debt securities. Carperk had no available-for-sale debt securities prior to this year. View transaction list View journal entry worksheet X No Date General Journal Debit Credit 1 December 31 Fair value adjustment - AFS 45,177 Unrealized gain - Equity 45,177