Prescrip Co. began operations in 2016. The cost and fair values for its long-term investments portfolio in available-for...
Prescrip Co. began operations in 2016. The cost and fair values
for its long-term investments portfolio in available-for-sale
securities are shown below. Prepare the December 31, 2017,
adjusting entry to reflect any necessary fair value adjustment for
these investments. (If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field.)
| Portfolio of Available-for-Sale Securities | Cost | Fair Value | ||||
| December 31, 2016 | $ | 75,519 | $ | 68,722 | ||
| December 31, 2017 | 81,156 | 86,025 | ||||
Homework Answers
Solution:
Existing balance of fair value adjustment at beginning of 2017 = $75,519 - $68,722 = $6,797 Credit
Required balance in fair value adjustment at the end of 2017 = $86,025 - $81,156 = $4,869 Debit
Fair value adjustment for 2017 = $4,869 + $6,797 = $11,666 Debit
| Journal Entries - Prescrip Co. | ||||
| Event | Date | Particulars | Debit | Credit |
| 1 | 31-Dec-17 | Fair value adjustment Dr | $11,666.00 | |
| To Unrealized holding gain or loss - OCI | $11,666.00 | |||
| (To record adjustment to fair value for long term investment) | ||||
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