Reporting and Interpreting Stock Investment Performance Kasznik Company began op

Question

Reporting and Interpreting Stock Investment Performance Kasznik Company began operations in 2016 and, by year-end (December 31), had made six stock investments. Year-end information orn these stock investments follows Company Cost or Equity Basis (as appropriate) Year-End Fair Value Investment Classification Barth, Inc. Foster, Inc. McNichols, Inc. Patell, Inc. Ertimur, Inc. Soliman, Inc. $68,000 162,500 197,000 157,000 100,000 136,000 $65,300 160,000 192,000 154,700 102,400 133,200 Trading Trading Available-for-sale Available-for-sale Equity method Equity method a. At what total amount are the trading stock investments reported at in the December 31, 2016, balance sheet? b. At what total amount are the available-for-sale stock investments reported at in the December 31, 2016, balance sheet? c. At what total amount are the equity method stock investments reported at in the December 31, 2016, balance sheet? d. What total amount of unrealized holding gains or unrealized holding losses related to stock investments appears in the 2016 income statement? unrealized loss e. What total amount of unrealized holding gains or unrealized holding losses related to stock investments appears in the stockholders' equity section of the December 31, 2016, balance sheet? xunrealized loss

Explanation / Answer

a. It would be lower of cost or fair value i.e. $ 160000+$65300 = $ 225300

b. It would be lower of cost or fair value i.e. $ 192000+$ 154700 = $ 346700

c. It would be on cost value i.e. $ 100000+$136000=$ 236000

d. Since equity investments are posted at its cost there would be no adjustment of unrealized gain or loss in it. However, for AFS and Trading investment, difference in FV and Cost Value would be taken. Accordingly,

E. AFS adjusted for FV are reported in Equity Statement. Thus, unrealized loss would be $ 5000 + $ 2300 for M and S as computed above and for retained earnings it would be of B and F of $ 2000 + $ 2700 = $ 4700

Company Cost FV Unrealized Loss B $ 68000 $ 65300 $ 2700 F $ 162000 $ 160000 $ 2000 M $ 197000 $ 192000 $ 5000 S $ 157000 $ 154700 $ 2300 Total $ 12000

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