Response to the following problem:
Park Co.'s long-term available-for-sale portfolio at December 31, 2010, consists of the following.
| Available-for-Sale Securities |
Cost |
Fair Value |
|
80,000 shares of Company A common stock
|
$1,070,600
|
$ 980,000
|
|
14,000 shares of Company B common stock
|
318,750
|
308,000
|
|
35,000 shares of Company C common stock
|
1,325,500
|
1,281,875
|
Park enters into the following long-term investment transactions during year 2011. Jan. 29 Sold 7,000 shares of Company B common stock for $158,375 less a brokerage fee of $3,100. Apr. 17 Purchased 20,000 shares of Company W common stock for $395,000 plus a brokerage fee of $3,500. The shares represent a 30% ownership in Company W. July 6 Purchased 9,000 shares of Company X common stock for $253,125 plus a brokerage fee of $3,500. The shares represent a 10% ownership in Company X. Aug. 22 Purchased 100,000 shares of Company Y common stock for $750,000 plus a brokerage fee of $8,200. The shares represent a 51% ownership in Company Y. Nov. 13 Purchased 17,000 shares of Company Z common stock for $533,800 plus a brokerage fee of $6,900. The shares represent a 5% ownership in Company Z. Dec. 9 Sold 80,000 shares of Company A common stock for $1,030,000 less a brokerage fee of $4,100.
The fair values of its investments at December 31, 2011, are: B, $162,750; C, $1,220,625; W, $382,500; X, $236,250; Y, $1,062,500; and Z, $557,600.
Required
1. Determine the amount Park 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 for 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 Park report on its December 31, 2011, income statement?