Weston Company Had the Following Long-Term Available-For-Sale Securities in Its

question 210

Essay

Weston Company had the following long-term available-for-sale securities in its portfolio at December 31, Year 1. Weston had several long-term investment transactions during the next year. After analyzing the effects of each transaction, (1) determine the amount Weston should report on its December 31, Year 1 balance sheet for its long-term investments in available-for-sale securities,
(2) determine the amount Weston should report on its December 31, Year 2 balance sheet for its long-term investments in available-for-sale securities, (3) prepare the necessary adjusting entry to record the fair value adjustment at December 31, Year 2.

$\begin{array}{l|l|l}\text { Available-for-Sale Securities (LT) } & \text { Cost } & \text { Fair } \\&&\text { Value } \\\hline 40,000 \text { shares of Beach common stock } & \$ 497,500 & \$ 488,900 \\\hline 15,000 \text { shares of Danfield common stock } & 410,200 & 412,600 \\\hline 18,000 \text { shares of Cardinal common stock } & 399,600 & 382,500 \\\hline\end{array}$

$\begin{array}{l|l}\hline \text { Jan. 22 } & \begin{array}{l}\text { Sold } 9,000 \text { shares of Cardinal common stock for } \$ 203,000 \text { less a brokerage fee } \\\text { of } \$ 850 .\end{array} \\\hline \text { Mar. 17 } & \begin{array}{l}\text { Purchased 30,000 shares of Apex common stock for } \$ 995,000 \text { plus a brokerage } \\\text { fee of } \$ 2,500 . \text { The shares represent a } 30 \% \text { ownership in Apex. }\end{array} \\\hline \text { Jun. 10 } & \begin{array}{l}\text { Purchased 108,000 shares of Desert Springs common stock for } \$ 1,525,000 \text { plus } \\\text { a brokerage fee of } \$ 4,200 \text {. The shares represent a } 54 \% \text { ownership in Desert } \\\text { Springs. }\end{array} \\\hline \text { Nov. 01 } & \text { Purchased 12,000 shares of Cliff common stock for } \$ 223,500 \text { plus a brokerage }\end{array}$
$\begin{array}{l|l|l}\text { Available-for-Sale Securities (LT) } & \text { Cost } & \text { Fair } \\&&\text { Value } \\\hline 40,000 \text { shares of Beach common stock } & \$ 497,500 & \$ 488,900 \\\hline 15,000 \text { shares of Danfield common stock } & 410,200 & 412,600 \\\hline 18,000 \text { shares of Cardinal common stock } & 399,600 & 382,500 \\\hline\end{array}$

$\begin{array}{l|l}\hline \text { Jan. 22 } & \begin{array}{l}\text { Sold } 9,000 \text { shares of Cardinal common stock for } \$ 203,000 \text { less a brokerage fee } \\\text { of } \$ 850 .\end{array} \\\hline \text { Mar. 17 } & \begin{array}{l}\text { Purchased 30,000 shares of Apex common stock for } \$ 995,000 \text { plus a brokerage } \\\text { fee of } \$ 2,500 . \text { The shares represent a } 30 \% \text { ownership in Apex. }\end{array} \\\hline \text { Jun. 10 } & \begin{array}{l}\text { Purchased 108,000 shares of Desert Springs common stock for } \$ 1,525,000 \text { plus } \\\text { a brokerage fee of } \$ 4,200 \text {. The shares represent a } 54 \% \text { ownership in Desert } \\\text { Springs. }\end{array} \\\hline \text { Nov. 01 } & \text { Purchased 12,000 shares of Cliff common stock for } \$ 223,500 \text { plus a brokerage }\end{array}$

Nov. 01 Purchased 12,000 shares of Cliff common stock for $223,500 plus a brokerage fee of $450. The shares represent a 10% ownership.
Dec. 31 At December 31, Year 2, the fair values of its investments are: Beach, $502,500; Danfield, $411,800; Cardinal, $203,100; Apex, $1,113,250; Desert Springs,$1,576,000; Cliff, $224,750.

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Definitions:

Business Strategy

A plan of action designed by organizations to achieve competitive advantage and meet their objectives.

Corporate Volunteerism

The policy or practice of employees volunteering their time or talents for charitable, educational, or other worthwhile activities, especially in the community.

Charitable Activities

Volunteer or donation-based efforts conducted by individuals or organizations to support causes and help those in need.

Community

A group of people living in the same place or having a particular characteristic in common.