I have a research paper that I need to have written before March 15th I have paste below the details of my assignment B L, Inc , located at 3200 College Avenue, Davie FL 33314, is a publicly traded firm that offers various business services In 2015 it started offering financial services As of December 31, 2015, B Ls fiscal year end, it held three investments totaling $70 million, an amount it considers material Details regarding the breakdown of these investments are listed below B L is your client and Warren Gordon is the President of B L You are a newly hired staff member of FAU, Inc , an accounting firm located at 777 Glades Road, Boca Raton, FL 33431 Because Warren is unfamiliar with the proper accounting treatment regarding investments in debt and equity securities according to United States Generally Accepted Accounting Principles (US GAAP), he has hired FAU, Inc to explain the accounting treatments specified by US GAAP Your firm has delegated to you the task of determining the treatment of investments , and has asked that you prepare a four (4) page typed memo ( not handwritten , 1 5 spacing not double spaced ), including a works cited page (the 4 th page of your memo should be designated as the works cited page use MLA Format for your works cited page) to the client explaining The standards that govern US GAAP treatment of investments, comprehensive income, and other comprehensive income How to classify the investments held at year end, assuming B L lacks significant influence How and where unrealized holding gains losses are reported The required financial statement presentation and note disclosures regarding investments In addition, you are to formulate a question to ask the client that would help you determine the different types of investment transaction(s) in which it could be involved, and include that in the conclusion of your memo Information regarding the investments held at 12 31 15 that particularly concerns Warren is as follows On January 1, 2015, B L, Inc purchased, at face value, $20 million of 10 year, 10 bonds of Techo, Inc Interest is paid semi annually on June 30 th and December 31 st Management has the ability and plans to hold these bonds until they mature On September 30, 2015, B L, Inc purchased, as a long term investment, 500,000 shares of Medex common stock at a cost of $25,000,000 On December 15, 2015, B L, Inc purchased 1 million shares of Cycam common stock at a cost of $25,000,000 Management plans to sell this investment in early 2016 The year end market prices of the Medex and Cycam common stock were $55 and $27 per share, respectively The fair value of the Techo bond investment was $16 million This memo is expected to be professional and informative Remember the purpose of the memo and the audience that it is addressing when you write it

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 27, 2024

I have a research paper that I need to have written before March 15th. I have paste below the details of my assignment. B&L, Inc.,

I have a research paper that I need to have written before March 15th. I have paste below the details of my assignment.

B&L, Inc., located at 3200 College Avenue, Davie FL 33314, is a publicly traded firm that offers various business services. In 2015 it started offering financial services. As of December 31, 2015, B&Ls fiscal year-end, it held three investments totaling $70 million, an amount it considers material. Details regarding the breakdown of these investments are listed below. B&L is your client and Warren Gordon is the President of B&L. You are a newly hired staff member of FAU, Inc., an accounting firm located at 777 Glades Road, Boca Raton, FL 33431. Because Warren is unfamiliar with the proper accounting treatment regarding investments in debt and equity securities according to United States Generally Accepted Accounting Principles (US GAAP), he has hired FAU, Inc. to explain the accounting treatments specified by US GAAP.

Your firm has delegated to you the task of determining the treatment of investments, and has asked that you prepare a four (4) page typed memo (not handwritten, 1.5 spacing -- not double spaced), including a works cited page (the 4^th page of your memo should be designated as the works cited page; use MLA Format for your works cited page) to the client explaining

The standards that govern US GAAP treatment of investments, comprehensive income, and other comprehensive income.
How to classify the investments held at year-end, assuming B&L lacks significant influence.
How and where unrealized holding gains / losses are reported.
The required financial statement presentation and note disclosures regarding investments.

In addition, you are to formulate a question to ask the client that would help you determine the different types of investment transaction(s) in which it could be involved, and include that in the conclusion of your memo.

Information regarding the investments held at 12/31/15 that particularly concerns Warren is as follows:

On January 1, 2015, B&L, Inc. purchased, at face value, $20 million of 10 year, 10% bonds of Techo, Inc. Interest is paid semi-annually on June 30^th and December 31^st. Management has the ability and plans to hold these bonds until they mature.
On September 30, 2015, B&L, Inc. purchased, as a long-term investment, 500,000 shares of Medex common stock at a cost of $25,000,000.
On December 15, 2015, B&L, Inc. purchased 1 million shares of Cycam common stock at a cost of $25,000,000. Management plans to sell this investment in early 2016.

The year-end market prices of the Medex and Cycam common stock were $55 and $27 per share, respectively. The fair value of the Techo bond investment was $16 million.

This memo is expected to be professional and informative. Remember the purpose of the memo and the audience that it is addressing when you write it.