At the end of 2018, Terry Company prepared the following schedule of investments in available-for-sale debt securities (all of which were acquired at par value):
Company | Amortized Cost | 12/31/18 Fair Value | Cumulative Change in Fair Value |
Morgan Company | $35,000 | $34,200 | $(800) |
Nance Company | 60,000 | 63,200 | 3,200 |
Totals | $95,000 | $97,400 | $2,400 |
During 2019, the following transactions occurred:
July 1 | Purchased Oscar Company debt securities with a par value of 100,000 for $97,000. The securities carry an annual interest rate of 10%, mature on December 31, 2021, and pay interest seminannually on July 1 and December 31. Terry uses the straight-line method to amortize any discounts or premiums. |
Oct. 11 | Sold all of the Morgan Company securities for $33,000 plus interest of $1,400. |
Dec. 31 | Received interest of $6,000 on the Nance Company and Oscar Company debt securities, and the following yearend total market values were available: Nance Company debt securities, $64,000; Oscar Company debt securities, $95,200. |
Required:
1. | Prepare journal entries to record the preceding information. |
2. | Show how the preceding items are reported on Terry’s December 31, 2019, balance sheet. Assume all investments are noncurrent. |
3. | Next Level If Terry uses IFRS, how would the accounting for investments be different from U.S. GAAP? |
Preparation of journal entries to record the preceding information. Showing of how the preceding items are reported on Terry’s December 31, 2019, balance sheet. Assume all investments are noncurrent. Next Level If Terry uses IFRS, how would the accounting for investments be different from U.S. GAAP? Refer the below images for more detailed solution.
At the end of 2018, Terry Company prepared the following schedule of investments in available-for-sale debt...
At the end of 2018, Terry Company prepared the following schedule of investments in available-for-sale debt securities (all of which were acquired at par value): Company Amortized Cost 12/31/18 Fair Value Cumulative Change in Fair Value Morgan Company $35,000 $34,200 $(800) Nance Company 60,000 63,200 3,200 Totals $95,000 $97,400 $2,400 During 2019, the following transactions occurred: July 1 Purchased Oscar Company debt securities with a par value of 100,000 for $97,000. The securities carry an annual interest rate of 10%,...
Exercise 13-12 Available-for-Sale Securities At the end of 2018, Terry Company prepares the following schedule of investments in available-for-sale debt securities (all of which were acquired at par value): Company Amortized Cost 12/31/18 Cumulative Change Fair Value in Fair Value Morgan Company $35,000 $34,200 $(800) Nance Company $50,000 $53,100 $3,100 Totals $85,000 $87,300 $2,300 During 2019, the following transaction occurred: July 1 Purchased Oscar Company debt securities with a par value of 100,000 for $98,000. The...
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At the beginning of 2018, Ace Company had the following portfolio of investments in available-for-sale debt securities (all of which were acquired at par value): Security Cost 1/1/18 Fair Value A $35,000 $44,000 B 53,000 50,000 Totals $88,000 $94,000 During 2018, the following transactions occurred: May 3 Purchased C debt securities at their par value for $50,000. July 1 Sold all of the A securities for $44,000 plus interest of $1,000. Dec. 31 Received interest of $1,000 on the B...
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