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Pleasehelpforeachproblem! HarambeInc.hasthefollowingaccountbalancesasof12/31/2016and12/31/2017beforeclosingentries: (in millions) 12/31/2016 12/31/2017 InvestmentsTrading 274 277 Investments - AFS 880 894 Net Unrealized Holding Gains (Losses) I/S 3 (7) Net Unrealized Holding
- Pleasehelpforeachproblem!
- HarambeInc.hasthefollowingaccountbalancesasof12/31/2016and12/31/2017beforeclosingentries:
(in millions) | 12/31/2016 | 12/31/2017 |
InvestmentsTrading | 274 | 277 |
Investments - AFS | 880 | 894 |
Net Unrealized Holding Gains (Losses) I/S | 3 | (7) |
Net Unrealized Holding Gains (Losses) OCI | (4) | 8 |
Gain (Loss) on Sale of Trading | 0 | 2 |
Gain (Loss) on Sale of AFS | 4 | 3 |
Fair Value Adjustment Trading | 53 | 46 |
Fair Value Adjustment AFS | 104 | 112 |
- a) Assume that Trading securities are short-term and AFS securities are long-term. What should Harambe record for investments on the Balance Sheet in 2016 and 2017?
- b) Recreate the fair value adjusting entry for Trading and AFS Investments for 2017.
- c) If Harambe received $14 million for selling AFS securities during the year, how much did Harambe purchase in AFS securities during the year? (Hint: It may be helpful to recreate the selling AFS journal entry)
- d) Assume that $1 million of the gain on sale of the AFS was due to the change in FV of that investment in 2017. How much of the 2017 fair value adjusting entry for AFS securities was due to (1) the change in fair value of investments and (2) reclassification?
- e) What effect did the investment transactions have on the income statement for 2017?
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