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Novak Corp. is a medium - sized corporation specializing in quarrying stone for building construction. The company has long dominated the market, at one time
Novak Corp. is a mediumsized corporation specializing in quarrying stone for building construction. The company has long dominated the market, at one time achieving a market penetration. During prosperous years, the companys profits, coupled with a conservative dividend policy, resulted in funds available for outside investment. Over the years, Novak has had a policy of investing idle cash in equity securities In particular, Novak has made periodic investments in the companys principal vendor of mining equipment, Norton Industries. Although the firm currently owns of the outstanding common stock of Norton Industries, Novak does not have significant influence over the operations of Norton Industries.
Cheryl Thomas has recently joined Novak as assistant controller, and her first assignment is to prepare the December yearend adjusting entries for the accounts that are valued by the fair value rule for financial reporting purposes. Thomas has gathered the following information about Novaks pertinent accounts.
Novak has equity securities related to Delaney Motors and Patrick Electric. During Novak purchased shares of Delaney Motors for $; these shares currently have a fair value of $ Novak investment in Patrick Electric has not been profitable; the company acquired shares of Patrick in April at $ per share, a purchase that currently has a value of $
Prior to Novak invested $ in Norton Industries and has not changed its holdings this year. This investment in Norton Industries was valued at $ on December Novak ownership of Norton Industries has a current fair value of $ on December Prepare the appropriate adjusting entries for Novak as of December to reflect the application of the "fair value" rule for
the securities described above. List debit entry before credit entry. Credit account titles are automatically indented when amount is
entered. Do not indent manually. If no entry is required, select No Entry" for the account titles and enter for the amounts.
Account Titles and Explanation
Debit
Credit
Fair Value Adjustment
Unrealized Holding Gain or Loss IncomeN
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