Problem 1

On December 31, 2018 a company had the following securities in its minority passive equity investment portfolio:

Prior to making the year-end fair value adjustment entry, the Fair Value Adjustment Equity Investments account had a credit balance of $4,320.

The market value of the securities in the companys minority passive equity investment portfolio on December 31, 2018 are as follows:

On June 30, 2019, the company received dividends on its investment in Equity2 securities totaling $3,000.

On September 28, 2019, the company sold of its Equity1 shares for $28,300.

The market value of these securities in the companys minority passive equity investment portfolio on December 31, 2019 are as follows:

Determine the following amounts:

1. The unrealized gain or loss recognized on December 31, 2018 for the companys minority passive equity investment portfolio.

2. The gain or loss recognized on the sale of of the companys investment in Equity1 securities on September 28, 2019.

3. The balance in the Fair Value Adjustment Equity Investments account on December 31, 2019 after making the adjusting entry to bring the portfolio to market value.

4. How would the company account for the dividends received on June 30, 2019?

Security Equity1 Equity2 Equity3 Cost $50,000 24,000 63,700 Security Equity1 Equity2 Equity3 Market Value $48,000 27,200 66,800 Security Equity1 Equity2 Equity3 Market Value $29,200 24,200 70,500 Security Equity1 Equity2 Equity3 Cost $50,000 24,000 63,700 Security Equity1 Equity2 Equity3 Market Value $48,000 27,200 66,800 Security Equity1 Equity2 Equity3 Market Value $29,200 24,200 70,500