Question

1-Jan	Lance Corp. purchased a 40% equity in Sloan Company for		$     160,000
31-Dec	Sloan Company declared and paid a $40,000 cash dividend and reported
	net income of $100,000.
a	Prepare the journal entries for January 1 and December 31 for Lance Corp.
b	Show the Balance Sheet presentation of this investment at 12-31

	Weaver Company has the following data at December 31, 2015 for its securities:
	Securities	COST	FAIR
			VALUE
	Trading securities	90,000	92,000
	Available for sale securities	74,000	71,000
a	Prepare the adjusting entries to report the securities at fair value.
b	On what financial statement and in what section of that statement would each of
	the above accounts be reported. (4 all together)

Answer 1

1-(a)	Date	Accounts Titles and Explanation	Debit	Credit
	Jan 01	Stock Investments	$160,000
		Cash		$160,000
		(To record purchased of equity)
	Dec 31	Cash	$16,000		($40,000 x 40%)
		Stock Investments		$16,000
	Dec 31	Stock Investments	$40,000		($100,000 x 40%)
		Revenue from Investment in Sloan Corp		$40,000
(b)
		Investment in Sloan, January 1	$160,000
		Less: Dividend received	($16,000)
		Plus: Share of reported income	$40,000
		Investment in Sloan, December 31	$184,000
1-(a)	Date	Accounts Titles and Explanation	Debit	Credit
	1	Fair Value Adjustment-Trading	$2,000
		Unrealized Gain-Income		$2,000
	2	Unrealized Gain or Loss -Equity	$3,000
		Fair Value Adjustment-Available for sale		$3,000
		Balance sheet (Partial)
		December 31, 2015
		Current Assets
		Short-term Investments, at fair value	$92,000
		Long-Term Investment
		Available for sale securities	$74,000
		Stockholder's Equity
		Less: Unrealized Gains or Loss on Investments	($3,000)