(Financial Statement Presentation of Available for Sale Investments) Kennedy Company has the following portfolio of available for sale securities at December 31, 2012.
|
Per Share |
||||
|
Security |
Quantity |
Percent Interest |
Cost |
Price |
|
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, 2012, balance sheet relative to these long term available for sale securities?
On December 31, 2013, Kennedy’s portfolio of available for sale securities consisted of the following common stocks.
|
Per Share |
||||
|
Security |
Quantity |
Percent Interest |
Cost |
Price |
|
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 2013, 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, 2013, balance sheet relative to available for sale securities investments? What should be reported to reflect the transactions above in Kennedy’s 2013 income statement?
(c) Assuming that comparative financial statements for 2012 and 2013 are presented, draft the footnote necessary for full disclosure of Kennedy’s transactions and position in equity securities.