Fair Value Journal Entries, Available-for-Sale Investments Hurricane Inc. purchased a portfolio of available-for-sale securities in Year 1, its first year of operations. The cost and fair value of this portfolio on December 31, Year 1, was as follows: Name Tornado Inc. Tsunami Corp. Typhoon Corp. $17,850 26,810 12,160 $56,820 On June 12, Year 2, Hurricane purchased 550 shares of Rogue Wave Inc. at $32 per share plus a $150 brokerage commission. Total Number of Shares Year 2, June 12 1,200 750 Total Cost Total Fair Value 400 $16,080 24,600 12,800 $53,480 a. Provide the journal entries to record the following: 1. The adjustment of the available-for-sale security portfolio to fair value on December 31, Year 1. 2. The June 12, Year 2, purchase of Rogue Wave Inc. stock. Year 1, Dec. 31 b. How are unrealized gains and losses treated differently for available-for-sale securities than for trading securities? Unrealized gains and losses for available-for-sale securities reported as a credit (positive) or debit (negative) balance in the the changes in fair value are not reflected on the as is the case with trading securities. " section. As a result,

Fair Value Joumal Entries, Avalable-for-5ale Investments Hurricane Inc. purchased a portfotio of avalable-for-sale securities in Year 1, its first year of operations. The cost and fair value of this portfolio on December 31 , Year 1, was as follows: On June 12, Year 2, Hurricane purchased 550 shares of Regue Wave Inc, at 332 per share plus a $150 brokerage commission. a. Provide the journal entries to record the follawing: 1. The adjustment of the available-for-sale secunty portfolio to fair value on December 31, Year 1. 2. The June 12, Year 2, purchase of hogue Wave inc. stock. b. How are unrealged gains and losses treated differently foc avalable-for-sale securties than for trading securities? Unreavzed pains and losses for available-for-sale securties reported as a credit (positive) or debit (negaive) balance in the the changes in fali value are not reflected in the , as is the case with trading securites. section. As a result