Investments 829 CHAPTER 15 Learning Objectives 3, 4 P15-233 Accounting for equity investments The beginning balance sheet of Text Source Co included a $700,000 investment in Taylor stock (20% ownership). During the year, Text Source completed the following investment transactions: 1. Dec. 31 Fair Value Adjustment-Equity Investments DR $5,000 Mar. 3 May 15 Dec. 15 31 31 Purchased 5,000 shares at $13 per share of Josh Software common stock as a long-term equity investment, representing 3% ownership, no significant influence. Received a cash dividend of $0.69 per share on the Josh investment. Received a cash dividend of $100,000 from Taylor investment. Received Taylor's annual report showing $100,000 of net income. Received Josh's annual report showing $620,000 of net income for the year. Taylor's stock fair value at year-end was $620,000. Josh's common stock fair value at year-end was $14 per share. 31 31 Requirements 1. Journalize the transactions for the year of Text Source. 2. Post transactions to T-accounts to determine the December 31, 2018, balances related to the investment and investment income accounts, 3. Prepare Text Source's partial balance sheet at December 31, 2018, from your answers in Requirement 2. 4. Where is the unrealized holding gain or loss associated with the Josh stock reported H Merge & Cente P15-23B G H M N Requirements 1. Joumalize the transactions for the year of Text Source 2. Pout transactions to T-accounts to determine the December 31, 2018 balances related to the investment and investment income accounts, 5. Prepare Text Source's partial balance sheet at December 31, 2018 from your answers In Requirement 2 2. Where is the unrealized holding gain or lose associated with the Josh stock reported? Solution: Requirement 1 Date Accounts and Explanation Debit Credit Page 1 1 29 30 21 35 30 40 65 Calculations ST E15 615-10 E15-11 E15-16 E15-12 E15-13 E15-15 E15-14 fx P15-23B E F G H K 1 47 48 49 30 51 Calculations 53 57 58 59 60 61 82 53 54 65 56 68 89 Page 2 70 71 74 75 75 T7 78 79 80 81 83 Requirement 2 50 15-10 E15.11 E15.12 E15-13 E15-14 E15-15 E15-10 Page: 1 of 2 E - = il 13 G Merge f P15-238 E F G H K M Requirement Equity Investments Fair Value Adjustment-Equity Investments Equity Investments - Taylor Unrealized Holding Gain - Equity Investments 00 01 Dividend Revenue Revenue from Investments 08 04 05 300 OT SOS 109 110 111 112 113 114 115 106 117 116 119 120 121 122 123 124 - Page 3 Calculated in Requirement 1. Requirement 3 TEXT SOURCE CO. Balance Sheet (Partial) December 31, 2018 Assets 120 120 190 130 133 E15-11 E15-12 E16-13 E15-14 E15-15 E15.18 15-10 Page: 1 of 2
