Answer:- A
Investment classified as Held for maturity
Date | Accounts | Dr | Cr |
12/31/2017 | Investment in Mud Co. bonds | 5,000 | |
To Bank A/c | 5,000 | ||
(being investment in Mud Co. bonds recorded) | |||
12/31/2018 | Investment in Mud Co. bonds | 5,000 | |
To Bank A/c | 5,000 | ||
(being investment in Mud Co. bonds recorded) | |||
In this amount is invested as Held for maturity, so the short term decline in the value of investment is ignored as the returns is predetermined.
Answer:- B Investment classified as Available for sale
Date | Accounts | Dr | Cr |
12/31/2017 | Investment in Mud Co. bonds | 4,200 | |
Other Comprehensive Income(OCI) | 800 | ||
To Bank A/c | 5,000 | ||
(being investment in Mud Co. bonds recorded) | |||
12/31/2018 | Investment in Mud Co. bonds | 900 | |
To Bank A/c | 900 |
Available for sale securities are debt and equity securities that are not expected to be Held for Maturity. Available for sale securities are reported on the balance sheet at the fair value. But any unrealized gains and losses are not recognized in the income statement but are reported in other comprehensive income as a part of shareholders’ equity.
Q1. Calvin Corp. holds Mud Co. bonds as an investment. On 1/1/2017, the bond investment had...
Q1. Calvin Corp. holds Mud Co. bonds as an investment. On 1/1/2017, the bond investment had a fair market value of $5,000 and an amortized cost of $5,000. On 12/31/2017, the SEC reports that Mud has admitted to "fraudulent accounting practices." On that day, the fair value of the bond investment falls to $4,200. The 12/31/2017 event is viewed as and accounted for as an impairment event. On 12/31/2018, the fair market value has recovered to $5,100. A. Assume the...
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...
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...
On January 1, 2017, Swifty Company purchased 11% bonds, having a maturity value of $328,000, for $353.515.61. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Swifty Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows....
Exercise 17-4 On January 1, 2017, Grouper Company purchased 12% bonds, having a maturity value of $278,000, for $299,076.51. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2017 2018 2019 $296,600 $287,300 $286,200 2020 2021 $288,200 $278,000 (a) (b) (c) Prepare the journal...
Tanner-UNF Corporation acquired as a long-term investment $240
million of 6% bonds, dated July 1, on July 1, 2018. The market
interest rate (yield) was 8% for bonds of similar risk and
maturity. Tanner-UNF paid $200 million for the bonds. The company
will receive interest semiannually on June 30 and December 31.
Company management has classified the bonds as available-for-sale
investments. As a result of changing market conditions, the fair
value of the bonds at December 31, 2018, was $210...
Q3. On January 01, 2018, Z_Corp bought common shares in Alpha, Beta, and Gamma, as shown in the table below. During 2019, Z_Corp sold all Gamma shares for $3.10 per share, or 993 total. At 12/31/2019, Z Corp continues to hold Alpha and Beta. Z Corp uses FVNI to account for its Investment in Equity Securities. Shares 1/1/2018 Cost per share $3.00 5.00 4.00 Total cost $150 Stock Alpha Beta Gamma 12/31/2018 Total Total fair cost value $150 $175 200...
Q3. On January 01, 2018, Z_Corp bought cominon shares in Alpha, Beta, and Gamma, as shown in the table below. During 2019, Z_Corp sold all Gamına shares for $3.10 per share, or $93 total. At 12/31/2019, Z_Corp continues to hold Alpha and Beta. Z_Corp uses FVNI to account for its Investment in Equity Securities. Shares Stock Alpha Beta Gamma 1/1/2018 Cost per share $3.00 5.00 4.00 Total cost $150 200 120 12/31/2018 Total Total fair cost value $150 $175 200...
Q3. On January 01, 2018, Z_Corp bought common shares in Alpha, Beta, and Gamma, as shown in the table below. During 2019, Z_Corp sold all Gamma shares for $3.10 per share, or 993 total. At 12/31/2019, Z Corp continues to hold Alpha and Beta. Z Corp uses FVNI to account for its Investment in Equity Securities. Shares 1/1/2018 Cost per share $3.00 5.00 4.00 Total cost $150 Stock Alpha Beta Gamma 12/31/2018 Total Total fair cost value $150 $175 200...
Exercise 9-20
On January 1, 2018, Bramble Ltd. paid $387,293.66 for 12% bonds
of Variation Ltd. with a maturity value of $360,000. The bonds
provide the bondholders with a 10% yield. They are dated January 1,
2018, mature on January 1, 2024, and pay interest each December 31.
Bramble acquired the bond investment as part of its portfolio of
trading securities and it accounts for the bonds at FV-NI,
following IFRS. At December 31, 2018, Bramble’s year end, the bonds...