Friday, 6 June 2014

Ticker Services began operations in 2011 and maintains long-term investments in available-for-sale securities. The year-end cost and fair values for its portfolio of these investments follow. Cost Fair Value December 31, 2011 $ 312,350 $ 302,980 December 31, 2012 356,079 377,444 December 31, 2013 484,267 572,888 December 31, 2014 731,243 650,806 Prepare journal entries to record each year-end fair value adjustment for these securities

Ticker Services began operations in 2011 and maintains long-term investments in available-for-sale securities. The year-end cost and fair values for its portfolio of these investments follow.
  
Cost Fair Value
  December 31, 2011 $ 312,350     $ 302,980    
  December 31, 2012 356,079     377,444    
  December 31, 2013 484,267     572,888    
  December 31, 2014 731,243     650,806    

  
Prepare journal entries to record each year-end fair value adjustment for these securities
 

Explanation:
Dec. 31, 2011 Record fair value of securities ($312,350 − $302,980) = $9,370
Dec. 31, 2012 Record fair value of securities.
Fair value adjustment-AFS (LT) = $356,079 − $377,444 = $21,365 net gain ($9,370 prior loss + $21,365 current period gain).
Dec. 31, 2013 Record fair value of securities.
Fair value adjustment-AFS (LT) = $484,267 − $572,888 = $88,621 net gain ($88,621 current period gain – $21,365 prior gain).
Dec. 31, 2014 Record fair value of securities.
Fair value adjustment-AFS (LT) = $731,243 − $650,806 = $80,437 net loss ($88,621 prior gain + $80,437 current period loss).