The investments of Harlon Enterprises included the following cost and fair value amounts: ($ in millions) Fair Value, Dec. 31 Securities Available-for-Sale 2016 Cost 2017 A Corporation shares B Corporation bonds C Corporation shares $ 20 $14 na $ 37 35 35 15 14 na D Industries shares 50 46 45 Totals $115 $95 $101 Harlon Enterprises sold its holdings of A Corporation shares on June 1, 2017, for $15 million. On September 12, 2017, it purchased the C Corporation shares. Required: 1. What is the effect of the sale of the A Corporation shares and the purchase of the C Corporation shares on Harlon’s 2017 pretax earnings? 2. At what amount should Harlon’s securities available-for-sale portfolio be reported in its 2017 balance sheet? What adjusting entry is needed to accomplish this? What is the effect of the adjustment on Harlon’s 2017 pre- tax earnings?


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