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Sandridge Inc. purchased 1,000 Transocean Corporation bonds in 2020 for $500 per bond and classified the...

Sandridge Inc. purchased 1,000 Transocean Corporation bonds in 2020 for $500 per bond and classified the investment as securities available-for-sale. The value of the Transocean investment was $600 per bond on December 31, 2021, and $750 per bond on December 31, 2022. During 2023, Hawk sold all of its Diamond investment at $700 per bond.

If Sandridge records unrealized holding gains and losses up to the moment of sale, what would be the amount of reclassification adjustment that Sandridge would record upon sale?

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Answer #1

Unrealized gain and fair value adjustment recorded till December 31, 2022 = ($750 - $500) X 1,000 = $250 x 1,000 = $250,000 D

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