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

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.