Goofy Inc. bought a sizeable amount of Crazy Co.'s bonds for $205,000 on May 5, 2020, and classified the investment as available-for-sale. The market value of the bonds declined to $129,000 by December 31, 2020. Goofy reclassified this investment as trading securities in December of 2021 when the market value had risen to $163,000. What effect on 2021 net income should be reported by Goofy for the Crazy Co. bonds? $34,000 net unrealized holding gain

Goofy Inc. bought a sizeable amount of Crazy Co.'s bonds for $205,000 on May 5, 2020, and classified the investment as available-for-sale. The market value of the bonds declined to $129,000 by December 31, 2020. Goofy reclassified this investment as trading securities in December of 2021 when the market value had risen to $163,000. What effect on 2021 net income should be reported by Goofy for the Crazy Co. bonds? $34,000 net unrealized holding gain

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 2MC: During 2021, Anthony Company purchased debt securities as a long-term investment and classified them...

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During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 loss
Refer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith Corporation bonds has a market value of 12,500. Prepare the year-end journal entry to record the unrealized gain or loss.
S&L Financial buys and sells securities expecting to earn profits on short-term differences in price. On December 27, 2018, S&L purchased Coca-Cola bonds at par for $875,000 and sold the bonds on January 3, 2019, for$880,000. At December 31, the bonds had a fair value of $873,000. What pretax amounts did S&L include in its2018 and 2019 net income as a result of this investment (ignoring interest)?
CSUN Corporation purchased 1,000 Diamond Corporation bonds in 2018 for $500 per bond and classified the investment as securities available-for-sale. The value of the Diamond investment was $600 per bond on December 31, 2019, and $650 per bond on December 31, 2020. During 2021, CSUN sold all of its Diamond investment at $700 per bond. If CSUN records unrealized holding gains and losses up to the moment of sale, what would be the amount of reclassification adjustment that CSUN would record upon sale? A credit of $150,000. A debit of $200,000. A debit of $150,000. A credit of $200,000.
On January 1, 2019, Alpha Inc purchased $500,000, 9% bonds issued by Beta Corp. The bonds have a maturity date of December 31, 2024. The market interest rate on January 1, 2019 was 10%. If Alpha Inc accounts for this investment under the FVOCI model, what is the amount at which the Investment in Beta Corp. Bonds will be reported on the statement of financial position at December 31, 2021, given that the current market interest rate is 9.5%? $490,401 $481,046 $487,566 $493,728
On December 31, 2020, Alberta Inc. purchased $500,000, 10% bonds issued by Banff Ltd. The bonds have a maturity date of December 31, 2026. The market interest rate on December 31, 2020 was 9.5%. If Alberta Inc. accounts for this investment under the amortized cost model, what is the amount at which the Investment in Banff Ltd. Bonds will be reported on the statement of financial position at December 31, 2021, given that the current market interest rate is 9%? $519,448 $509,599 $511,050 $490,523
On February 18, 2018, Union Corporation purchased $1,139,000 of IBM bonds. Union will hold the bonds indefinitely, and may sell them if their increases sufficiently. On December 31, 2018, and December 31, 2019, the market value of the bonds was $1,105,000 and $1,156,000, respectfully. Prepare the adjusting entry for December 31, 2018 and 2019. The answer they have is: Dec 31,2018 Unrealized holding gain 34,000 Fair value adjustment 34,000 Dec 31,2019 Fair value adjustment 51,000 Unrealized holding gain 51,000 Please show me the calculation steps for the answer: $51,000. How do you get this number?
On February 1, 2020, Aggie Corporation sold its investment in Smith Corporation bonds for $12,500. The bonds have a face value of $12,000 and a stated interest rate of 10%. The market value of the bonds on December 31, 2019 was $12,300. Prepare the journal entries to record the sale of the bonds and the adjustments of the unrealized gain or loss.
A company purchases debt securities for $100,000 at the beginning of 2022. It classifies as trading securities and $60,000 as AFS securities. It sells the securities in 2023. Required For each of the following scenarios, indicate the net effect on income and other comprehensive income in each year 2022 and 2023. In each case, any unrealized decline in value below cost is expected to be recovered and is attributed to market factors. a. Fair value, end of 2022 Selling price, 2023 Note: Use a negative sign with an answer to indicate the net effect amount decreases Income or OCI. OCI End of 2022 $ 2023 b. Trading securities AFS securities $38,000 $65,000 43,000 64,000 Income Fair value, end of 2022 Selling price, 2023 End of 2022 $ 2023 (2,000)✓ $ 9,000 ✓ Trading securities AFS securities $45,000 $56,000 42,000 68,000 Note: Use a negative sign with an answer to indicate the net effect amount decreases Income or OCI. OCI (4,000) ✔ 0 x 5,000 ✓ 0 x Income 5,000 $ 5,000 ✓
Marigold Company in its first year of operations provides the following information related to one of its available-for-sale debt securities at December 31, 2020. Amortized cost $51,100 Fair value 42,200 Expected credit losses 12,600 A. What is the amount of credit loss that marigold should report on this available-for-sale security at december 31, 2020? Amount of the credit loss $ 8,900 B. Prepare the journal entry to record the credit loss, if any ( and other adjustments needed), at December 31, 2020? date account titles and explanations debit credit 12/31/20 8,900 8,900 Please note that the answer is NOT Debit Loss on available for sale debt securities and Credit avilable for sale debt securities. These are the account titles I can choose from... Accumulated Other…
On June 1, 2019, Hansen Company purchased ten $1,000 Francisco Company bonds at par and classified them as held-to-maturity. In 2020, Francisco experienced financial difficulties and on Dec 31, 2020, based on an evaluation of the investment, Hansen determined that expected credit losses are $4,000. In 2021, Francisco improved its financial condition, and, on Dec 31, 2021, Hansen believed that expected credit losses would only be $2,000. Required: Prepare the journal entries for Hansen to record the above events under U.S. GAAP.
On February 18, 2018, Union Corporation purchased 10,000 shares of IBM bonds as a long-term investment for$600,000. Union will hold the bonds indefinitely, and may sell them if their price increases sufficiently. On December 31, 2018, and December 31, 2019, the market value of the bonds was $580,000 and $610,000, respectively.Required:1. What is the appropriate reporting category for this investment? Why?2. Prepare the adjusting entry for December 31, 2018.3. Prepare the adjusting entry for December 31, 2019.