Required information

Problem 15-5A Long-term investment transactions; unrealized and realized gains and losses LO C2, P3, P4

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Stoll Co.s long-term available-for-sale portfolio at December 31, 2016, consists of the following.

Stoll enters into the following long-term investment transactions during year 2017.

Jan.

29

Sold 11,000 shares of Company B common stock for $165,375 less a brokerage fee of $3,100.

Apr.

17

Purchased 21,000 shares of Company W common stock for $430,000 plus a brokerage fee of $2,800. The shares represent a 30% ownership in Company W.

July

6

Purchased 14,000 shares of Company X common stock for $256,625 plus a brokerage fee of $2,800. The shares represent a 12% ownership in Company X.

Aug.

22

Purchased 100,000 shares of Company Y common stock for $560,000 plus a brokerage fee of $7,600. The shares represent a 51% ownership in Company Y.

Nov.

13

Purchased 18,000 shares of Company Z common stock for $530,300 plus a brokerage fee of $5,600. The shares represent a 5% ownership in Company Z.

Dec.

9

Sold 70,000 shares of Company A common stock for $1,026,000 less a brokerage fee of $4,100.

The fair values of its investments at December 31, 2017, are: B, $166,250; C, $1,224,125; W, $386,000; X, $239,750; Y, $1,066,000; and Z, 561,100.

Problem 15-5A Part 3

3. What amount of gains or losses on transactions relating to long-term investments in available-for-sale securities should Stoll report on its December 31, 2017, income statement?

Available-for-Sale Securities 70, 000 shares of Company A common stock 22, 000 shares of Company B common stock 31, 000 shares of Company C common stock Fair Value $1, 036, 600 960, 000 322, 000 1, 350, 000 , 302, 875 Cost 332, 750 Required 1 Required 2 Prepare any necessary December 31, 2017, adjusting entry to record the fair value adjustment for the long-term investments in available-for-sale securities Fair Value Adjustment Computation - Available-for-Sale Securities Fair Value Unrealized Amount Gain or Loss? December 31, 2017 AFS Securities Company B common stock Company C common stock Company X common stock Company Z common stock of shares Cost 11,000 S 166,375S 166,250 31,000 1,350,0001,224,125 259,425 535,900 14,000 239,750 18,000 561,100 Total Loss 2,311,700 2,191,225 Required December 31, 2017 Balance in the Fair Value Adjustment account December 31, 2016 Balance in the Fair Value Adjustment account December 31, 2017 required adjustment to the Fair Value Adjustment account S 120,475 134,475 $ 14,000 Credit Credit Debit Fair Value Adjustment(AFS) 134,475 Balance 12-31-2016 12-31-2017 adjustment Balance 12-31-2017 14,000 120,475 Required 1 Required 2 Loss