accounting- Topic: Fair-Value Method of Accounting

MGMT E-2600Homework #9Due: November 17, 2015 by 11:59pm EST!!!Topic: Fair-Value Method of Accounting1.Following is a portion of the investments footnote from Snap Chat Inc. 2014 10-K.(in millions)2014Amortized cost of available-for-sale securitiesGross unrealized gains!!!!!!!!!!Gross unrealized losses$420,51810,088$ 29,987What amount does Snap Chat report for available-for-sale securities on its 2014 balance sheet?Topic: Dividends2. Parker Corp. holds a 15% equity investment in Schmidt Inc. Tanner Investments holds 35% ofSchmidt Inc. stock. On May 1, 2014, Schmidt Inc. declares and pays dividends to its stockholders.How will the dividend affect each company’s balance sheet account: Schmidt Inc. investment?!!!!For Example: Increase, Decrease, No EffectAnd Explain your rationale.Parker Corp.!!!!!!!Tanner Investments!Topic: Trading Securities – Financial Statements Effects Template3. Record the following transactions of HES Inc. in the financial statements effects template below.!!1) Purchased 2,800 shares of JT Marlin Corp. common stock for $25 per share. These securitiesare publicly traded and HES classifies them as trading securities.2) Received a cash dividend of $2 per share from JT Marlin.3) Year-end market price of JT Marlin common stock is $19 per share.4) Sold 1,200 shares for $16 per share, the closing price for the day.Income StatementBalance SheetTransactionCashAsset+NoncashAssets=Liabilities+Contrib.Capital+EarnedCapitalRevenues–Expen-ses=1)–=2)=–=3)=–=4)!!!!!!!!==–NetIncome=Topic: Consolidation – Calculating Goodwill4. Gezotis Bank and Trust and First Gandevani Bank merge on January 1, 2014. Before the mergertransaction, the balance sheets of the two companies are as follows:!(in millions)Chicago Bank& TrustFirst UnitedBankAssets$2,950$1,450Liabilities$1,275$ 825Common stock ($1 par value)150100Additional paid-in capital2251251,300400$2,950$1,450Retained earnings!Total liabilities and equitiesGezotis Bank and Trust issues 75,000 shares of its common stock with a market value of $885 millionto the owners of First Gandevani Bank in return for all of their shares of First Gandevani commonstock. The assets of First Gandevani have a market value in excess of book value of $29 million.!The consolidated balance sheet of Gezotis Bank and Trust at January 1, 2014 would report goodwillof:

 

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