Question

Loreal-American Corporation purchased several marketable securities during 2018. At December 31, 2018, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2017, and all are considered securities available-for-sale.

	Cost			Fair Value				Unrealized Holding Gain (Loss)
Short term:
Blair, Inc.	$	514,000			$	388,000			$	(126,000	)
ANC Corporation		467,000				514,000				47,000
Totals	$	981,000			$	902,000			$	(79,000	)
Long term:
Drake Corporation	$	514,000			$	577,000			$	63,000
Aaron Industries		703,000				677,000				(26,000	)
Totals	$	1,217,000			$	1,254,000			$	37,000

Required:
1. Prepare appropriate adjusting entries at December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. What amounts would be reported in the income statement at December 31, 2018, as a result of these adjusting entries?

Answer 1

Appropriate adjusting endres al Dee. 34. 2018 -Credit $ 62000 - Event General Journal . : Debit 1 Un realized holding loss-oap 42000 Fair Value adjustment - Explanations : Facire value adjen trend $(79000) - $ 37000 = $(42000) Need to move from a fair value adjustment of $0 to $ (42000) : . . .. fair value Adjustment Balance on 4/1/2018 s on + Adjustment needed to update faire value Balance needed on 12/31/2018 $ 142000) ($ 37000 – 79000) ;*

@ Answer: [ Amount Too Explanations i Answere is none; because Accumulaled ned holing gaine and losses for securities available for-'sale are reported as a componend of shareholderes équeilycin, accumulated o-lhes comprehensive income)', and changes in the balance are reported as other comprehensive income or loss in the schelemend of comprehensive income rather than as pard of earnings . This statement can be reponded either (a) as.combined statement of comprehensive income that includes net income Other compirehensive income, On, (b) as a separcele slalement of comprehensive income