Prepare all appropriate journal entries related to the

Reference no: EM13571392

As a long-term investment at the beginning of the fiscal year, Florists International purchased 30% of Nursery Supplies Inc.'s 8 million shares for $40 million. The fair value and book value of the shares were the same at that time. The company realizes that this investment typically would be accounted for under the equity method, but instead chooses the fair value option. During the year, Nursery Supplies earned net income of $50 million and distributed cash dividends of $1.25 per share. At the end of the year, the fair value of the shares is $35 million.

Required:

How would this investment be classified on Florists balance sheet?

	Trading securities
	Available-for-sale securities
X	Significant-influence investments
	Held-to-maturity securities
	Other securities

Prepare all appropriate journal entries related to the investment during 2013. (If no entry is required for a particular event, select "No journal entry required" in the first account field. Enter your answers in millions, (i.e., 10,000,000 should be entered as 10).)

Event	General Journal	Debit	Credit
1	Investment in Nursery Supplies shares
	Cash
2	No journal entry required
3	Cash
	Investment revenue
4	Net unrealized holding gains and losses - I/S
	Fair value adjustment

Reference no: EM13571392

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