Question: Information regarding Central Company's individual investments in securities during its calendar-year 2011, along with the December 31, 2011, fair values, follows.

a. Investment in Beeman Company bonds: $418,500 cost, $455,000 fair value. Central intends to hold these bonds until they mature in 2016.

b. Investment in Baybridge common stock: 29,500 shares; $332,450 cost; $361,375 fair value. Central owns 32% of Baybridge's voting stock and has a significant influence over Baybridge.

c. Investment in Carroll common stock: 12,000 shares; $169,750 cost; $183,000 fair value. This investment amounts to 3% of Carroll's outstanding shares, and Central's goal with this investment is to earn dividends over the next few years.

d. Investment in Newtech common stock: 3,500 shares; $95,300 cost; $93,625 fair value. Central's goal with this investment is to reap an increase in fair value of the stock over the next three to five years. New tech has 30,000 common shares outstanding.

e. Investment in Flock common stock: 16,300 shares; $102,860 cost; $109,210 fair value. This stock is marketable and is held as an investment of cash available for operations.

Required: 1. Identify whether each investment should be classified as a short-term or long-term investment. For each long-term investment, indicate in which of the long-term investment classifications it should be placed.

2. Prepare a journal entry dated December 31, 2011, to record the fair value adjustment of the long-term investments in available-for-sale securities. Central had no long-term investments prior to year 2011.