2012103 Varahs Corp. The following data pertain to marketable securities portfolio of Varahs Corp., a large US insurance company. Assume all securities were purchased on Dec 31, 2016. Investment Portfolio $000s Balance Sheet, December 31, 2016 2017 2018 2019 Harold's Chicken Shack: Fixed Maturities Held - to - maturity (at cost)* S 10,700 $ 10,700 S 9,630 $ 12,840 Intelligentsia Coffee: Fixed Maturities Available-for-sale at market)** S 24,000 $ 25,000 $ 26,688 $ 37,500 International Pool Tour: Stocks Trading (at market) *** S 48,000 $ 50,000 $ 53,375 5 75,000 Total 82,700 5 85,700 5 89,693 $ 125,340 $ $ 5 * Fair Market values ** Cost *** Cost $ 5 5 9,600 26,750 53,500 5 $ 5 10,000 26,750 53,500 5 5 $ 10,675 24,075 48,150 $ $ s 15,000 32.100 64,200 Proceeds from sale of securities on December 30, 2018 Harold's Chicken Shack: Fixed Maturities 5 1,177 Intelligentsia Coffee: Fixed Maturities 5 2,943 International Pool Tour: Stocks $ 5,885 Au 1,445 3,611 7,223 Purchase of securities on December 30, 2019 Harold's Chicken Shack: Fixed Maturities 5 Intelligentsia Coffee: Fixed Maturities 5 International Pool Tour: Stocks 5 Interest / Dividend Income Harold's Chicken Shack: Fixed Maturities Intelligentsia Coffee: Fixed Maturities 5 International Pool Tour: Stocks International Pool Tour 2017 Earnings per share, $ $ 428 1,070 2.140 $ $ S 385 963 1.926 S $ $ 449 1,124 2,247 $ 2018 $ 3.00 3.10 The stock price of International Pool Tour was $24 on Dec 31, 2016. 2 Compute the reported return on investment (ROI) on each portfolio component separately for 2018 3 If Varahs Corp.had used Trading method (mark-to-market) accounting for its investment in Harold's Chicken Shack what will be the ROI from the investment in Harold's Chicken Shack in 2018? 4 Suppose Varahs Corp. uses the equity method for accounting for its investments in International Pool Tour. Dividends are paid for stocks on record as of December 29. What income will the company report for its investment in International Pool Tour in 2018? 2012103 Varahs Corp. The following data pertain to marketable securities portfolio of Varahs Corp., a large US insurance company. Assume all securities were purchased on Dec 31, 2016. Investment Portfolio $000s Balance Sheet, December 31, 2016 2017 2018 2019 Harold's Chicken Shack: Fixed Maturities Held - to - maturity (at cost)* S 10,700 $ 10,700 S 9,630 $ 12,840 Intelligentsia Coffee: Fixed Maturities Available-for-sale at market)** S 24,000 $ 25,000 $ 26,688 $ 37,500 International Pool Tour: Stocks Trading (at market) *** S 48,000 $ 50,000 $ 53,375 5 75,000 Total 82,700 5 85,700 5 89,693 $ 125,340 $ $ 5 * Fair Market values ** Cost *** Cost $ 5 5 9,600 26,750 53,500 5 $ 5 10,000 26,750 53,500 5 5 $ 10,675 24,075 48,150 $ $ s 15,000 32.100 64,200 Proceeds from sale of securities on December 30, 2018 Harold's Chicken Shack: Fixed Maturities 5 1,177 Intelligentsia Coffee: Fixed Maturities 5 2,943 International Pool Tour: Stocks $ 5,885 Au 1,445 3,611 7,223 Purchase of securities on December 30, 2019 Harold's Chicken Shack: Fixed Maturities 5 Intelligentsia Coffee: Fixed Maturities 5 International Pool Tour: Stocks 5 Interest / Dividend Income Harold's Chicken Shack: Fixed Maturities Intelligentsia Coffee: Fixed Maturities 5 International Pool Tour: Stocks International Pool Tour 2017 Earnings per share, $ $ 428 1,070 2.140 $ $ S 385 963 1.926 S $ $ 449 1,124 2,247 $ 2018 $ 3.00 3.10 The stock price of International Pool Tour was $24 on Dec 31, 2016. 2 Compute the reported return on investment (ROI) on each portfolio component separately for 2018 3 If Varahs Corp.had used Trading method (mark-to-market) accounting for its investment in Harold's Chicken Shack what will be the ROI from the investment in Harold's Chicken Shack in 2018? 4 Suppose Varahs Corp. uses the equity method for accounting for its investments in International Pool Tour. Dividends are paid for stocks on record as of December 29. What income will the company report for its investment in International Pool Tour in 2018
