The following disclosure note appeared in the December 31, 2016, annual report of the Intel Corporation. Note 5: Cash and Investments (partial) Available-for-sale investments as of December 31, 2016, and December 26, 2015, were as follows: Ger Adjusted realised tried to the realized Tale Cont Lale G Capponese + 4 . 1 IN 00 Total fursa iment Intel also indicates the following: During 2016, we sold available- for-sale investments for proceeds of S4.1 billion. ... The gross realized gains on sales of available-for-sale investments were $530 million in 2016. Intel's Note 16 (Other Comprehensive Income) indicates unrealized holding gains of $1,170 million during 2016, and a reclassification adjustment of $530 for gains that had previously been included in OCI and recorded in the fair value adjustment but which were now being included in net income after being realized upon sale Required: Draw a T-account that shows the change between the December 26, 2015, and December 31, 2016, balances for the fair value adjustment associated with Intel's AFS investments for 2016. By how much did the fair value adjustment change during 2016? (4 marks) Prepare a journal entry that records any unrealized holding gains and losses that occurred during 2016. Ignore income taxes (3 marks) Prepare a journal entry that records any reclassification adjustment for available-for-sale investments sold during 2016. Ignore income taxes (3 marks) Using your journal entries from requirements 2 and 3, adjust your T-account from requirement 1. Have you accounted for the entire change in the fair value adjustment that occurred during 2016 Speculate as to the cause of any difference. (5 marks) The following disclosure note appeared in the December 31, 2016, annual report of the Intel Corporation. Note 5: Cash and Investments (partial) Available-for-sale investments as of December 31, 2016, and December 26, 2015, were as follows: Ger Adjusted realised tried to the realized Tale Cont Lale G Capponese + 4 . 1 IN 00 Total fursa iment Intel also indicates the following: During 2016, we sold available- for-sale investments for proceeds of S4.1 billion. ... The gross realized gains on sales of available-for-sale investments were $530 million in 2016. Intel's Note 16 (Other Comprehensive Income) indicates unrealized holding gains of $1,170 million during 2016, and a reclassification adjustment of $530 for gains that had previously been included in OCI and recorded in the fair value adjustment but which were now being included in net income after being realized upon sale Required: Draw a T-account that shows the change between the December 26, 2015, and December 31, 2016, balances for the fair value adjustment associated with Intel's AFS investments for 2016. By how much did the fair value adjustment change during 2016? (4 marks) Prepare a journal entry that records any unrealized holding gains and losses that occurred during 2016. Ignore income taxes (3 marks) Prepare a journal entry that records any reclassification adjustment for available-for-sale investments sold during 2016. Ignore income taxes (3 marks) Using your journal entries from requirements 2 and 3, adjust your T-account from requirement 1. Have you accounted for the entire change in the fair value adjustment that occurred during 2016 Speculate as to the cause of any difference
