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Brief Exercise 14-14 Shonen Knife Corporation has elected to use the fair value option for one of its notes payable. The note

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Answer #1

1.

Determine the unrealized holding gain or loss on the note.

Unrealized holding gain or loss = Carrying value - Fair value = $16,000 - $17,500 = ($1,500)

2.

Prepare the entry to record any unrealized holding gain or loss.

Account Titles and Explanation Debit Credit
Unrealized holding gain or loss - equity $1,500
           Notes Payable $1,500
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