Capollo’s long term available for sale portfolio at December 31, 2010, consists of the following.
|
Available for Sale Securities |
Cost |
Fair Value |
|
45,000 shares of Company R common stock |
$1,118,250 |
$1,198,125 |
|
17,000 shares of Company S common stock |
616,760 |
586,500 |
|
22,000 shares of Company T common stock |
294,470 |
303,600 |
Capollo enters into the following long term investment transactions during year 2011.
Jan. 13 Sold 4,250 shares of Company S stock for $144,500 less a brokerage fee of $2,390.
Mar. 24 Purchased 31,000 shares of Company U common stock for $565,750 plus a brokerage fee of $9,900. The shares represent a 62% ownership interest in Company U.
Apr. 5 Purchased 85,000 shares of Company V common stock for $267,750 plus a brokerage fee of $4,500. The shares represent a 10% ownership in Company V.
Sept. 2 Sold 22,000 shares of Company T common stock for $313,500 less a brokerage fee of $5,400.
Sept. 27 Purchased 5,000 shares of Company W common stock for $101,000 plus a brokerage fee of $2,100. The shares represent a 25% ownership interest in Company W.
Oct. 30 Purchased 10,000 shares of Company X common stock for $97,500 plus a brokerage fee of $2,340. The shares represent a 13% ownership interest in Company X.
The fair values of its investments at December 31, 2011, are: R, $1,136,250; S, $420,750; U, $545,600; V, $269,875; W, $109,375; and X, $91,250.
Required
1. Determine the amount Capollo should report on its December 31, 2011, balance sheet for its long term investments in available for sale securities.
2. Prepare any necessary December 31, 2011, adjusting entry to record the fair value adjustment of the long term investments in available for sale securities.
3. What amount of gains or losses on transactions relating to long term investments in available for sale securities should Capollo report on its December 31, 2011, income statement?