Mata kuliah : F0024 – Pengantar Akuntansi II
Tahun
: 2010
CH 16
INVESTMENTS
Lecture 19, 20
QUESTIONS
1. What are the reasons that corporations invest in
securities?
2. a. What is the cost of an investment in bonds?
b. When is interest on bonds recorded?
5. What is the cost of an investment in stock?
Bina Nusantara University
3
QUESTIONS
9. What constitutes “significant influence” when an
investor’s financial interest is below the 50% level?
10. Distinguish between the cost and equity methods
of accounting for investments in stocks.
11. What are consolidated financial statements?
Bina Nusantara University
4
P16-2A
In January 2010, the management of Noble Company
concludes that it has sufficient cash to permit some
short-term investments in debt and stock securities.
During the year, the following transactions occured.
Feb. 1 Purchased 600 shares of Hiens common stock
for $31,800, plus brokerage fees of $600.
Mar. 1 Purchased 800 shares of Pryce common stock
for $20,000, plus brokerage fees of $400.
Apr. 1 Purchased 50 $1,000, 7% Roy bonds for
$50,000, plus $1,000 brokerage fees. Interest is payable
semiannually on April 1 and October 1.
Bina Nusantara University
5
P16-2A
July 1 Received a cash dividend of $0.60 per share on
the Hiens common stock.
Aug. 1 Sold 200 shares of Hiens common stock at $58
per share less brokerage fees of $200.
Sept. 1 Received a $1 per share cash dividend on the
Pryce common stock.
Oct. 1 Received the semiannual interest on the Roy
bonds.
Oct. 1 Sold the Roy bonds for $50,000 less $1,000
brokerage fees.
Bina Nusantara University
6
P16-2A
At December 31, the fair value of the Hiens common
stock was $55 per share. The fair value of the Pryce
common stock was $24 per share.
Instructions:
a.Journalize the transactions and post to the accounts
Debt Investments and Stock Investments. (Use the Taccount form).
b.Prepare the adjusting entry at December 31, 2010, to
report the investment securities at fair value. All
securities are considered to be trading securities.
Bina Nusantara University
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P16-2A
c. Show he balance sheet presentation of investment
securuties at December 31, 2010.
d. Identify the income statement accounts and give the
statement classification of each account.
Bina Nusantara University
8
P16-6A
The following data, presented in alphabetical order, are
taken from the records of Urbina Corporation.
Accounts payable
Accounts receivable
Accumulated depreciation-building
Accumulated depreciation-equipment
Allowance for doubtful accounts
Bonds payable (10%, due 2018)
Buildings
Cash
Bina Nusantara University
$ 240,000
140,000
180,000
52,000
6,000
500,000
950,000
42,000
9
P16-6A
Common stock ($10 par value; 500,000
shares authorized, 150,000 shares issued)
Dividend payable
Equipment
Goodwill
Income taxes payable
Investment in Flott common stock (10%
ownership), at cost
Investment in Portico common stock (30%
Ownership), at equity
Bina Nusantara University
1,500,000
80,000
275,000
200,000
120,000
278,000
380,000
10
P16-6A
Land
Market adjustment-available-for-sale
securities (Dr)
Merchandise inventory
Notes payable (due 2011)
Paid-in capital in excess of par value
Premium on bonds payable
Prepaid insurance
Retained earnings
Bina Nusantara University
390,000
8,000
170,000
70,000
130,000
40,000
16,000
103,000
11
P16-6A
Short-term stock investment, at fair value
(and cost)
Unrealized gain-available-for-sale securities
180,000
8,000
The investment in Flott common stock is considered to
be along-term-available-for-sale securities.
Instructions:
Prepare a classified balance sheet at December 31,
2010.
Bina Nusantara University
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