During 2012, Blaylock Corp. made the following purchases: 1,000 of the 500,000 outstanding shares of Ogel Company common stock for $68 per share. 90…

During 2012, Blaylock Corp. made the following purchases:

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During 2012, Blaylock Corp. made the following purchases: 1,000 of the 500,000 outstanding shares of Ogel Company common stock for $68 per share. 90…
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  • 1,000 of the 500,000 outstanding shares of Ogel Company common stock for $68 per share.
  • 90 Patterson Inc. 8% bonds at par. Blaylock purchased these bonds on October 1, 2012. Each bond has a $1,000 face value, pays coupons every March 31 and September 30, and matures on March 31, 2030. 
  • 100 AHI Corp. 6% bonds at par. Blaylock purchased these bonds on January 2, 2012. Each bond has a $1,000 face value, pays coupons every June 30 and December 31, and matures on December 31, 2021.  

The management of Blaylock classifies the Patterson bonds as available-for-sale and the AHI bonds as held-to-maturity. The Ogel investment is not large enough for significant influence.

The December 31, 2012, fair market values of the investments were as follows:

  • Ogel stock: $73 per share
  • Patterson bonds: $970 each (i.e., “at 97”)
  • AHI bonds: $990 each (i.e., “at 99”)

The December 31, 2013, fair market values of the investments were as follows:

  • Ogel stock: $76 per share
  • Patterson bonds: $960 each (“at 96”)
  • AHI bonds: $1,020 each (i.e., “at 102”)

During 2014, Blaylock sold its entire investment in Ogel stock for $75 per share. The December 31, 2014, fair market values of the remaining investment were as follows:

  • Patterson bonds: $300 each (i.e., “at 30”)
  • AHI bonds: $1,010 each (i.e., “at 101”)

As of December 31, 2014, Blaylock’s management views the decline in value of the Patterson bonds as an impairment.

What is the aggregate value of the three investment assets that Blaylock would report on its December 31, 2012 balance sheet?

a. $258,000

b. $259,300

c. $260,300

d. $263,000

e. $265,300

Ignoring taxes, what is the effect of the investments on Blaylock’s reported income for 2012?

a. $7,800 increase

b. $10,100 increase

c. $11,100 increase

d. $12,800 increase

e. $18,200 increase

What is the aggregate value of the three investment assets that Blaylock would report on its December 31, 2013 balance sheet?

a. $262,400

b. $264,400

c. $266,000

d. $268,400

e. $276,000

Ignoring taxes, what is the effect of the investments on Blaylock’s reported income for 2013?

a. $14,400 increase

b. $15,300 increase

c. $16,200 increase

d. $17,300 increase

e. $18,200 increase

What is the aggregate value of the two remaining investment assets that Blaylock would report on its December 31, 2014 balance sheet?

a. $127,000

b. $128,000

c. $134,000

d. $290,000

e. $202,000

Ignoring taxes, what is the effect of the investments on Blaylock’s reported income for 2014?

a. $51,800 decrease

b. $50,800 decrease

c. $42,800 decrease

d. $12,200 increase

e. $20,200 increase

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