In June of 2018, Northrim AeroParts found itself in the enviable position of having about $750,000 of discretionary funds and decided to invest in a portfolio of equity securities. The investment is reported at fair value in accordance with GAAP. During the most recent three years, Northrim has not sold any of its investments and is investigating whether any changes are needed. You are an accounting analyst for the company and have been assigned the task of launching an initial investigation. To do so, you created a Tableau Dashboard showing the growth in market value of the portfolio along with that of the cost of the investment. You also charted the rate of growth in comparison with a market index representing stocks with a similar risk profile.
$200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 June 2018 July 2018 August 2018 September 2018 October 2018 Equity Investments November 2018 December 2018 January 2019 February 2019 March 2019 April 2019 May 2019 June 2019 July 2019 August 2019 September 2019 Cost October 2019 November 201 December 2019 January 2020 February 2020 March 2020 Market Value April 2020 May 2020 June 2020 July 2020 August 2020 September 2020 October 2020 November 2020 December 2020 January 2021 February 2021 March 2021 April 2021 May 2021 60% 80% 100% 120% 140% 160% June 2018 #tableau July 2018 August 2018 September 2018 October 2018 November 2018 December 2018 January 2019 February 2019 Investment Growth Relative to Market March 2019 April 2019 May 2019 June 2019 July 2019 August 2019 September 2019 October 2019 November 2019 December 2019 January 2020 February 2020 March 2020 April 2020 May 2020 June 2020 July 2020 August 2020 September 2020 Market Index Equity Investments v October 2020 November 2020 December 2020 January 2021 February 2021 March 2021 LP April 2021 May 2021 O Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 What is the likely reason for the shifts in the trend of the investment cost? ONorthrim invested an additional $100,000 at the beginning of 2019 and again in October of 2020. Northrim sold some of its investment at the beginning of 2019 and again in October of 2020. The FASB mandated a change in the way investments in equity securities are accounted for. Required 1 Required 2 Required 3 Required 4 How would you characterize the change in the investment portfolio since its inception? O Despite relatively minor dips in value, the portfolio has maintained a steady growth. The market value of the portfolio has more than doubled. The market value of the portfolio has risen, but that growth has been almost entirely a result of additional investments. Required 1 Required 2 Required 3 Required 4 $10,000 invested in the same portfolio of stocks in June 2018 would be worth how much currently? $ 12,000 $ 14,900 16,500 $ Required 1 Required 2 Required 3 Required 4 What would you conclude regarding whether any changes are needed? Changes in the composition of the portfolio and the process by which it is managed should be considered due to it underperforming the market in the most recent year. Maintaining the current portfolio composition seems warranted due to performance essentially in line with that of the market. No changes are needed because the portfolio has grown at a healthy pace since its inception. $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 June 2018 July 2018 August 2018 September 2018 October 2018 Equity Investments November 2018 December 2018 January 2019 February 2019 March 2019 April 2019 May 2019 June 2019 July 2019 August 2019 September 2019 Cost October 2019 November 201 December 2019 January 2020 February 2020 March 2020 Market Value April 2020 May 2020 June 2020 July 2020 August 2020 September 2020 October 2020 November 2020 December 2020 January 2021 February 2021 March 2021 April 2021 May 2021 60% 80% 100% 120% 140% 160% June 2018 #tableau July 2018 August 2018 September 2018 October 2018 November 2018 December 2018 January 2019 February 2019 Investment Growth Relative to Market March 2019 April 2019 May 2019 June 2019 July 2019 August 2019 September 2019 October 2019 November 2019 December 2019 January 2020 February 2020 March 2020 April 2020 May 2020 June 2020 July 2020 August 2020 September 2020 Market Index Equity Investments v October 2020 November 2020 December 2020 January 2021 February 2021 March 2021 LP April 2021 May 2021 O Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 What is the likely reason for the shifts in the trend of the investment cost? ONorthrim invested an additional $100,000 at the beginning of 2019 and again in October of 2020. Northrim sold some of its investment at the beginning of 2019 and again in October of 2020. The FASB mandated a change in the way investments in equity securities are accounted for. Required 1 Required 2 Required 3 Required 4 How would you characterize the change in the investment portfolio since its inception? O Despite relatively minor dips in value, the portfolio has maintained a steady growth. The market value of the portfolio has more than doubled. The market value of the portfolio has risen, but that growth has been almost entirely a result of additional investments. Required 1 Required 2 Required 3 Required 4 $10,000 invested in the same portfolio of stocks in June 2018 would be worth how much currently? $ 12,000 $ 14,900 16,500 $ Required 1 Required 2 Required 3 Required 4 What would you conclude regarding whether any changes are needed? Changes in the composition of the portfolio and the process by which it is managed should be considered due to it underperforming the market in the most recent year. Maintaining the current portfolio composition seems warranted due to performance essentially in line with that of the market. No changes are needed because the portfolio has grown at a healthy pace since its inception
