Nama:Amelia Putri adinda

Nim:0502202098
Kelas: Akuntansi syariah 4b

PROBLEM 17-8

(a) Fair Value Adjustment.................................. 645,000

Unrealized Holding Gain or Loss—Income... 645,000

Computations: Computations of Unrealized Gain or Loss in 2017

Fair Value
Unrealized
Security Cost Gain (Loss)
Delaney Motors $ 1,400,000 $1,600,000 $(200,000
Patrick Electric 1,000,000 720,000 (280,000)
Norton Ind. 22,500,000 22,225,000 275,000
$24,900,000 $24,545,000 ($355,000)
Previous Fair Value Adjustment (Cr) (1,000,000)*
Fair Value Adjustment (Dr) $ 645,000

* Computations of Unrealized Gain or Loss in 2016

Fair Value Unrealized

Security Cost Gain (Loss)
Norton Ind. 22,500,000 $21,500,000 ($1,000,000)

(b) The unrealized holding loss on the valuation on the equity securities is
reported on the income statement. The gain would appear in the “Other
revenues and gains” section of the income statement. The Fair Value
Adjustment is a valuation account and it will be used to show the
reduction in the fair value of the equity securities. The equity securities
portfolio is disclosed in the balance sheet as an asset and reported at
its fair value. The asset is probably noncurrent in nature.

The disclosure for these securities includes the change in net

unrealized holding gains or losses which was included in earnings.

(c) Equity Investments (Norton Industries)...................... 125,000

Investment Income ($500,000 X 25%).................. 125,000

Cash ($100,000 X 25%)................................................ 25,000

Equity Investments (Norton Industries)............... 25,000

With 25% ownership, Brooks has significant influence and should apply
the equity method. No fair value adjustments are recorded under the
equity method.
 (a) Equity Investment Portfolio

Fair Value Unrealized

Security Cost Gain (Loss)
Frank, Inc. $ 22,000 $ 32,000 $ 10,000
Ellis Corp. 115.000 95.000 -20.000
Mendota Company 124,000 96,000 -28.000
Total of portfolio $261.000 $223,000 $(38,000)

Statement of Financial Position-December 31, 2010

Investments:
Equity investments, at cost........ $261,000
Less: Securities fair value adjustment.. 38,000
Equity investments, at fair value.......... $223,000

Income Statement
Other income and expense Unrealized holding loss.. $38,000

(b) Equity Investment Portfolio

Fair Value Unrealized

Security Cost Gain (Loss)
Ellis Corp. $115,000 $140,000 $ 25,000
Mendota Company 174.000* 138,000** -36,000
Total of portfolio $289,000 $278,000 -11.000
Previous securities fair value
adjustment balance-Cr. -38,000
Securities Fair Value
Adjustment-Dr. $ 27,000

*(4,000 X $31)+(2,000 X $25)

**[(4,000 + 2,000) X $23]

Statement of Financial Position-December 31, 2011

Investments:
Equity Investments, at cost............ $289,000
Less: Securities fair value adjustm 11.000
Equity Investments, at fair value.. $278,000

Income Statement
Other income and expense Unrealized holding gain.............$27,000

The Frank investment is transferred to the non-trading investment

category at fair value, which is the new cost basis of the investment.