Acc423 Intermediate Accounting: P17-9 Kennedy Company has the following portfolio

Acc423 Intermediate Accounting



P17-9 Financial Statement Presentation of Available for Sale Investments

Kennedy Company has the following portfolio of available-for-sale securities at December 31, 2010.

Per Share

Security Quantity Percent Interest Cost Market

Frank, Inc. 2,000 shares 8% $11 $16

Ellis Corp. 5,000 shares 14% $23 $19

Mendota Company 4,000 shares 2% $31 $24

Instructions:

a. What should be reported on Kennedy's December 31, 2010 balance sheet relative to these long-term available-for-sale securities?

On December 31, 2011, Kennedy's portfolio of available-for-sale securities consisted of the following common stocks.

Per Share

Security Quantity Percent Interest Cost Market

Ellis Corp. 5,000 shares 14% $23 $28

Mendota Company 4,000 shares 2% $31 $23

Mendota Company 2,000 shares 1% $25 $23

At the end of year 2011, Kennedy Company changed its intent relative to its investment in Frank, Inc. and reclassified the shares to trading securities status when the shares were selling for $8 per share.

b. What should be reported on the face of Kennedy's December 31, 2011, balance sheet relative to available-for-sale securities investments? What should be reported to reflect the transactions above in Kennedy's 2011 income statement?

c. Assuming that comparative financial statements for 2010 and 2011 are presented, draft the footnote necessary for full disclosure of Kennedy's transactions and position in equity securities.
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