Question

The accounting records of Jamaican Importers, Inc., at January 1, 2018, included the following:

Assets:
Investment in IBM common shares	$	1,595,000
Less: Fair value adjustment		(170,000	)
	$	1,425,000

No changes occurred during 2018 in the investment portfolio.

Required:
Prepare appropriate adjusting entry(s) at December 31, 2018, assuming the fair value of the IBM common shares was:

1. $1,235,000
2. $1,510,000
3. $1,610,000

1) Record the fair value adjustment assuming the fair value of the IBM common shares was $1,235,000.

2) Record the fair value adjustment assuming the fair value of the IBM common shares was $1,510,000.

3) Record the fair value adjustment assuming the fair value of the IBM common shares was $1,610,000.

Answer 1

Solution:

Journal Entries - Jamaican Importers, Inc.
Event	Particulars	Debit	Credit
1	Unrealized holding gain or loss - OCI Dr	$190,000.00
	To Fair value adjustment		$190,000.00
	(To record adjustment to fair value of investment)
2	Fair value adjustment Dr	$85,000.00
	To Unrealized holding gain or loss - OCI		$85,000.00
	(To record adjustment to fair value of investment)
3	Fair value adjustment Dr	$185,000.00
	To Unrealized holding gain or loss - OCI		$185,000.00
	(To record adjustment to fair value of investment)