The following information shows Carperk Company’s individual investments in securities during its current year, along with the December 31 fair values.
a. Investment in Brava Company bonds: $420,500 cost; $457,000 fair value. Carperk intends to hold these bonds until they mature in 5 years.
b. Investment in Baybridge common stock: 29,500 shares; $362,450 cost; $391,375 fair value. Carperk owns 32% of Baybridge’s voting stock and has a significant influence over Baybridge.
c. Investment in Duffa bonds: $165,500 cost; $178,000 fair value. This investment is not readily marketable and is not classified as held-to-maturity or trading.
d. Investment in Newton notes: $90,300 cost; $88,625 fair value. Newton notes are not readily marketable and are not classified as held-to-maturity or trading.

e. Investment in Farmers common stock: 16,300 shares; $100,860 cost; $111,210 fair value. This stock is marketable, and Carperk intends to sell it within the year. This stock investment results in Carperk having an insignificant influence over Farmers.

Required
1. Identify whether each investment a through e should be classified as a short-term or long-term investment. For each investment, indicate in which of the six investment classifications listed in Exhibit 15.2 it should be placed.
2. Prepare a journal entry dated December 31 to record the fair value adjustment for the portfolio of available-for-sale debt securities. Carperk had no available-for-sale debt securities prior to this year.

Exhibit 15.2

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Held-to-Maturity Debt securities intended to be held until maturity Debt Investments Trading Debt securities that are actively traded Available-for-Sale Debt securities that are not HTM or Trading Insignificant Influence Equity securities with insignificant influence Equity Investments Significant Influence Equity securities with significant influence Controlling Influence Equity securities with controlling influence