Fair value adjustment already has a balance of 550000 prior to 2021, hence net journal to be passed for 800000-550000 = 250000
Credit allowance has balance of 300000 as on Dec 31, 2021, which should be 200000 as on Dec 31, 2022
S. no. | Date | General journal | Debit | Credit |
1 | December 31, 2021 | Credit Loss Expense (NI) | 3,00,000 | |
Allowance for Credit Losses | 3,00,000 | |||
2 | December 31, 2021 | Loss on investments (unrealised, OCI) | 2,50,000 | |
Fair value adjustment | 2,50,000 | |||
3 | December 31, 2022 | Allowance for Credit Losses | 1,00,000 | |
Credit Loss Expense (NI) | 1,00,000 | |||
4 | December 31, 2022 | Fair value adjustment | 2,25,000 | |
Gain on investments (unrealised, OCI) | 2,25,000 |
Jones Inc. 6% bonds, purchased at face value, with an amortized cost of $3,950,000, and classified...
Jones Inc. 6% bonds, purchased at face value, with an amortized cost of $3,950,000, and classified as an available-for-sale investment. Because of unrealized losses prior to 2021, the Jones bonds have a fair value adjustment account with a credit balance of $550,000, such that the carrying value of the Jones investment is $3,400,000 prior to making any adjusting entries in 2021. At December 31, 2021, the Jones investment had a fair value of $2,850,000, and Stewart calculated that $300,000 of...
Oliver Corporation 4% bonds, purchased at face value, with an amortized cost of $2,950,000, classified as a trading security. Because of unrealized losses prior to 2021, the Oliver bonds have a fair value adjustment account with a credit balance of $350,000, such that the carrying value of the Oliver investment is $2,600,000 prior to making any adjusting entries in 2021. At December 31, 2021, the Oliver investment had a fair value of $2,350,000, and Stewart calculated that $270,000 of the...
Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,600,000, and classified as held to maturity. At December 31, 2021, the Bee investment had a fair value of $3,650,000, and Stewart calculated that $540,000 of the fair value decline is a credit loss and $410,000 is a noncredit loss. At December 31, 2022, the Bee investment had a fair value of $3,850,000, and Stewart calculated that $290,000 of the difference between fair value and amortized cost...
10:08 AM Thu Feb 20 437% a Aas 1. Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,000,000, and classified as held to maturity. At December 31, 2018, the Bee investment had a fair value of $3,500,000, and Stewart calculated that S240,000 of the fair value decline is a credit loss and $260,000 is a noncredit loss. At December 31, 2019, the Bee investment had a fair value of $3,700,000, and Stewart calculated that $140,000...
Stewart Enterprises has the following investments, all purchased prior to 2021: Stewart does not intend to sell any of these investments and does not believe it is more likely than not that it will have to sell any of the bond investments before fair value recovers. Required: For each investment, Prepare the appropriate adjusting journal entries to account for each investment for 2021 and 2022. 1. Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,080,000,...
Stewart Enterprises has the following investments, all purchased prior to 2021: Stewart does not intend to sell any of these investments and does not believe it is more likely than not that it will have to sell any of the bond investments before fair value recovers. Required: For each investment, Prepare the appropriate adjusting journal entries to account for each investment for 2021 and 2022. 1. Bee Company 6% bonds, purchased at face value, with an amortized cost of $4,360,000,...
Stewart Enterprises has the following investments, all purchased prior to 2018: Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,000,000, and classified as held to maturity. At December 31, 2018, the Bee investment had a fair value of $3,500,000, and Stewart calculated that $240,000 of the fair value decline is a credit loss and $260,000 is a noncredit loss. At December 31, 2019. the Bee investment had a fair value of $3,700,000, and Stewart calculated...
Bloom Corporation purchased $1,750,000 of Taylor Company 5% bonds, at their face amount, with the intent and ability to hold the bonds until they matured in 2025, so Bloom classifies its investment as AFS. Unfortunately, a combination of problems at Taylor Company and in the debt securities market caused the fair value of the Taylor investment to decline to $1,200,000 during 2021. The following are the two alternative scenarios that should be analyzed independent of each other. 1. Bloom now...
Bloom Corporation purchased $1,750,000 of Taylor Company 5% bonds, at their face amount, with the intent and ability to hold the bonds until they matured in 2025, so Bloom classifies its investment as AFS. Unfortunately, a combination of problems at Taylor Company and in the debt securities market caused the fair value of the Taylor investment to decline to $1,200,000 during 2021. The following are the two alternative scenarios that should be analyzed independent of each other. Bloom now believes...
Accounts Available: Accumulated Other Comprehensive Income Allowance for Investment Impairment Bond Investment at Amortized Cost Cash Dividend Receivable Dividend Revenue FV-NI Investments FV-OCI Investments Gain on Sale of Investments GST Receivable Interest Expense Interest Income Interest Payable Interest Receivable Investment in Associate Investment Income or Loss Loss on Discontinued Operations Loss on Impairment Loss on Sale of Investments No Entry Note Investment at Amortized Cost Other Investments Recovery of Loss from Impairment Retained Earnings Unrealized Gain or Loss - OCI...