Available-For-Sale Debt Investment Impairment On January 1, 2020, Argonaut Industries pays $100,000 par value for debt securities issued by Bally Corporation, and designates them as AFS securi‐ ties. Following is valuation information on these securities for December 31, 2020 and 2021. Argonaut does not expect to sell the securities before recovery of losses at the end of either year.
Journal Entries for change in Fair Value on reporting dates
Available for Sale Securities are recorded at Fair Value and Changes in Fair Value are recorded in Unrealized Gain/Loss -OCI.
December 31, 2020 - Dr. Unrealized Loss - OCI $20,000
Cr. Available for Sale Debt Securities $20,000
[Being AFS Debt Securities recorded at Fair Value on reporting date]
Presentation
December 31, 2021 - Dr. Available for Sale Debt Securities $3,000
Cr. Unrealized Gain - OCI $3,000
[Being AFS Debt Securities recorded at Fair Value on reporting date]
Presentation
Available-For-Sale Debt Investment Impairment On January 1, 2020, Argonaut Industries pays $100,000 par value for debt...
The entire amount of impairment for an available-for-sale debt investment is recognized in earnings if fair value declines below amortized cost and: Multiple Choice The company has incurred non-credit losses. It is more likely than not that the investor will have to sell the investment before fair value recovers. The company has incurred credit losses. The impairment is viewed as temporary
E17.22 (LO 4) (Impairment) Elaina Company has the following investments as of December 31, 2020: Investments in common stock of Laser Company $1,500,000 Investment in debt securities of FourSquare Company $3,300,000 In both investments, the carrying value and the fair value of these two investments are the same at December 31, 2020. Elaina's stock investments does not result in significant influence on the operations of Laser Company. Elaina's debt investment is considered held-to-maturity. At December 31, 2021, the shares in...
cost of $800,000, and a fair value of $720,000. The company believes that impairment accounting is now E17.18 (LO 4) (Impairment of Debt Securities) Hagar Corporation has municipal bonds classi- fied as a held-to-maturity at December 31, 2020. These bonds have a par value of $800,000, an amortized b. What is the new cost basis of the municipal bonds? Given that the maturity value of the bonds is $800,000, should Hagar Corporation amortize the difference between the carrying amount and...
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%,...
Sheridan Company has the following investments as of December 31, 2020: Investments in common stock of Laser Company Investment in debt securities of FourSquare Company $1,630,000 $3,240,000 In both investments, the carrying value and the fair value of these two investments are the same at December 31, 2020. Sheridan's stock investments does not result in significant influence on the operations of Laser Company. Sheridan's debt investment is considered held-to-maturity. At December 31, 2021, the shares in Laser Company are valued...
At December 31, 2020, the available-for-sale debt portfolio for Cullumber, Inc. is as follows. Security Cost Fair Value Unrealized Gain (Loss) A $17,600 $14,200 $(3,400 ) B 11,000 14,800 3,800 C 23,400 26,300 2,900 Total $52,000 $55,300 3,300 Previous fair value adjustment balance—Dr. 300 Fair value adjustment—Dr. $3,000 On January 20, 2021, Cullumber, Inc. sold security A for $14,300. The sale proceeds are net of brokerage fees. Cullumber, Inc. reports net income in 2020 of $123,000 and in 2021 of...
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%,...
At December 31, 2020 and 2021, Coronado Industries had outstanding 4300 shares of $100 par value 6% cumulative preferred stock and 20000 shares of $10 par value common stock. At December 31, 2020, dividends in arrears on the preferred stock were $12100. Cash dividends declared in 2021 totaled $46000. What amounts were payable on each class of stock?
Question #2 The following are the cost and fair value for a debt investment (Available to December 31, 2020. of investment Available for Sale) on Fair Value Debt Investment - Available for Sale Cost 10,000,000 $ $ 9,000,000 Assume the company had Net Income of $620,000 at the end of 2020 Required: 1) Calculate the Unrealized Holding Gains and Losses. 2) Does the Unrealized Holding Gains and Losses affect the Income Statement or Balance Sheet 3) Prepare the journal entry...
At December 31, 2020, the available-for-sale debt portfolio for Culver, Inc is as follows. On January 20, 2021, Culver. Inc, sold security A for $30,200. The sale proceeds are net of brokerage fees. Prepare the adjusting entry at December 31, 2020, to report the portfolio at fair value. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Show the balance...