MGMT E-2600
Homework #9
Due: November 17, 2015 by 11:59pm EST
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Topic: Fair-Value Method of Accounting
1.
Following is a portion of the investments footnote from Snap Chat Inc. 2014 10-K.
(in millions)
2014
Amortized cost of available-for-sale securities
Gross unrealized gains
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Gross unrealized losses
$420,518
10,088
$ 29,987
What amount does Snap Chat report for available-for-sale securities on its 2014 balance sheet?
Topic: Dividends
2. Parker Corp. holds a 15% equity investment in Schmidt Inc. Tanner Investments holds 35% of
Schmidt 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?
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For Example: Increase, Decrease, No Effect
And Explain your rationale.
Parker Corp.
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Tanner Investments
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Topic: Trading Securities – Financial Statements Effects Template
3. Record the following transactions of HES Inc. in the financial statements effects template below.
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1) Purchased 2,800 shares of JT Marlin Corp. common stock for $25 per share. These securities
are 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 Statement
Balance Sheet
Transaction
Cash
Asset
+
Noncash
Assets
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Liabilities
+
Contrib.
Capital
+
Earned
Capital
Revenues
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Expen
-ses
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1)
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2)
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3)
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4)
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Net
Incom
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Topic: Consolidation – Calculating Goodwill
4. Gezotis Bank and Trust and First Gandevani Bank merge on January 1, 2014. Before the merger
transaction, the balance sheets of the two companies are as follows:
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(in millions)
Chicago Bank
& Trust
First United
Bank
Assets
$2,950
$1,450
Liabilities
$1,275
$ 825
Common stock ($1 par value)
150
100
Additional paid-in capital
225
125
1,300
400
$2,950
$1,450
Retained earnings
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Total liabilities and equities
Gezotis Bank and Trust issues 75,000 shares of its common stock with a market value of $885 million
to the owners of First Gandevani Bank in return for all of their shares of First Gandevani common
stock. The assets of First Gandevani have a market value in excess of book value of $29 million.
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The consolidated balance sheet of Gezotis Bank and Trust at January 1, 2014 would report goodwill
of:
