On March 25, 2021, Phillips Corporation purchased bonds of Atlas Corporation for $160 million and classified the securities as trading securities. On December 31, 2021, these bonds were valued at $176 million. Three months later, on April 3, 2022, Phillips Corporation sold these bonds for $167 million. As part of the multistep approach to record the 2022 transaction, Phillips Corporation should first update the fair value adjustment by recording: An unrealized holding gain of $25 million in 2022. An unrealized holding loss of $9 million in 2022. An unrealized holding gain of $7 million in 2022. A gain of $7 million in 2022.

On March 25, 2021, Phillips Corporation purchased bonds of Atlas Corporation for $160 million and classified the securities as trading securities. On December 31, 2021, these bonds were valued at $176 million. Three months later, on April 3, 2022, Phillips Corporation sold these bonds for $167 million. As part of the multistep approach to record the 2022 transaction, Phillips Corporation should first update the fair value adjustment by recording: An unrealized holding gain of $25 million in 2022. An unrealized holding loss of $9 million in 2022. An unrealized holding gain of $7 million in 2022. A gain of $7 million in 2022.

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...

See similar textbooks

Similar questions

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.
On March 25, 2021, Phillips Corporation purchased bonds of Atlas Corporation for $132 million and classified the securities as trading securities. On December 31, 2021, these bonds were valued at $150 million. Three months later, on April 3, 2022, Phillips Corporation sold these bonds for $140 million. As part of the multistep approach to record the 2022 transaction, Phillips Corporation should first update the fair value adjustment by recording: Multiple Choice An unrealized holding gain of $28 million in 2022. An unrealized holding loss of $10 million in 2022. An unrealized holding gain of $8 million in 2022. A gain of $8 million in 2022.
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.
In 2021, Cromwell Corporation purchased bonds of Oliver Company at par for $300,000 and classified the investment as available-for-sale. In 2022, the market value increased to $320,000. In 2023, the market value of the investment declined to $310,000, and the investment was sold for $310,000. Question Journal entries for 2023 would include: Debit to Bond Investment - AFS of $300,000 Debit to Fair Value Adjustment - AFS of $20,000 Debit to Gain on Sale of Bond Investment - AFS of $10,000 Debit to Unrealized Holding Gains and Losses - OCI for $20,000
On January 1, 2020, Dumaguete Company purchased bonds with face amount of P4,000,000 for P4,206,000. The business model of the entity in managing the financial asset is to collect contractual cash flows that are solely payment of principal and interest and also to sell the bonds in the open market. The entity has not elected the fair value option of measuring financial asset. The bonds mature on December 31, 2022 and pay 10% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 95 on December 31, 2020 and 90 on December 31, 2021. REQUIRED: What amount of unrealized loss should be reported as component of other comprehensive income in 2020? What amount of unrealized loss should be reported as component of other comprehensive income in 2021? What amount of cumulative unrealized loss should be reported in the statement of changes in equity on December 31, 2021?
During 2021, Lavida Loca Company purchased trading securities with the following cost and market value on December 31, 2021. Cost Market value A 300,000 400,000 B 1,500,000 1,700,000 C 3,800,000 3,900,000 The entity sold Investment C on January 10, 2022 for P 4,000,000 What is the unrealized gain or loss should be reported in the income statement for 2021? a. 100,000 gain b, 100,000 loss c. 400,000 gain d. 400,000 loss
On October 1, 2021, Valorant Company purchased a debt security having a face value of P3,000,000 with an interest rate of 10% for P3,200,000 including the accrued interest. A total of P50,000 was incurred and paid by Genshin Company which is in relation to the acquisition of the debt instrument. Valorant Company has a business model for fair value through other comprehensive income. The bonds mature on January 1, 2026 and pay interest semi-annually on January 1 and July 1. On December 31, 2021, the bonds had a market value of P3,400,000. What amount should the investment be initially recorded? A.P3,175,000B.P3,200,000C.P3,250,000D.P3,125,000
On its December 31, 2020, balance sheet, Cullumber Company reported its investment in equity securities, which had cost $720000, at fair value of $656000. At December 31, 2021, the fair value of the securities was $693000. What should Cullumber report on its 2021 income statement as a result of the increase in fair value of the investments in 2021?
On January 1, 2020, Liam Company purchased bonds with face amount of P10,000,000 for P10,515,000. The business model of the entity in managing the financial asset is to collect contractual cash flows that are solely payment of principal and interest and to sell the bonds in the open market. The entity has not elected the fair value option of measuring financial assets. The bonds mature on December 31, 2022 and pay 109ó interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 95 on December 31, 2020 and 90 on December 31, 2021. What amount of unrealized loss should be reported as component of other comprehensive income on December 31, 2021?
Strawberry Corp. has various equity investment at fair value through profit or loss transactions during 2020 and 2021. The acquisition cost of all the securities in its portfolio during 2020 was P 532,000. At December 31, 2020 and December 31, 2021, the market values of these investments were P 541,000 and P 512,000, respectively. In 2022, all of these securities were sold for P 550,000. Assuming no other transactions are noted regarding these financial assets at fair value through profit or loss, what is the amount of unrealized gain/loss reported in the 2021 income statement relating to these securities? A. P 29,000 loss B. P 20,000 loss C. P 29,000 gain D. P 20,000 gain
During 2020, Boston Company purchased marketable securities as a trading investment. For the year ended December 31, 2020, the entity recognized an unrealized loss of P230,000. There were no security transactions during 2021. The entity provided the following information on December 31, 2021: Trading security = A; Cost = 2,450,000; Market Value = 2,300,000. Trading security = B; Cost = 1,800,000; Market value = 1,820,000. In the 2021 income statement, what amount should be reported as unrealized gain or loss?