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

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

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.
Investments On October 4, 2019, Collins Company purchased 100 bonds of Steph Company for 6,400 as a short-term investment in securities classified as available for sale. On December 31, 2019, the bonds had a fair value of 6,300, and on February 8, 2020, Collins sold the bonds for 6,700. Required: In journal entry form, prepare the spreadsheet entries to record these transactions for Collins Companys 2019 and 2020 statement of cash flows.
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 declined to $200,000. In 2023, the market value of the investment roset o $230,000, and the investment was sold. How much should Cromwell record as a realized gain or loss in its determmation of net income for 2023? a. $0 b. $30,000 gain c. $70,000 loss d. $100,000 loss
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.
For several years Fister Links Products has held Microsoft bonds, considered by the company to be securities available-for-sale. The bonds were acquired at a cost of $500,000. At the end of 2018, their fair value was$610,000 and their amortized cost was $510,000. At the end of 2019, their fair value was $600,000 and theiramortized cost was $520,000. At what amount will the investment be reported in the December 31, 2019, balance sheet? What adjusting entry is required to accomplish this objective (ignore interest)?
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
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
At the beginning of 2019, Ace Company had the following portfolio of investments in available-for-sale debt securities (all of which were acquired at par value): Security Cost Fair Value (1/1/2019) A $20,000 $24,000 B $30,000 $31,500 Totals $50,000 $55,500 During 2019, the following transactions occurred: May 3 Purchased C debt securities at their par value for $50,000. July 1 Sold all of the A securities for $24,000 plus interest of $1,500. Dec. 31 Received interest of $7,600 on the B and C securities. Additionally the following information was available: Security Fair Value (12/31/2019) B $31,250 C $52,500 Question Journal entries for…
On February 18, 2021, Union Corporation purchased 1,311 IBM bonds as a long-term investment at their face value for a total of $1,311,000. Union will hold the bonds indefinitely, and may sell them if their price increases sufficiently. On December 31, 2021, and December 31, 2022, the market value of the bonds was $1,273,000 and $1,330,000, respectively. Required: 2. & 3. Prepare the adjusting entry for December 31, 2021 and 2022. (If no entry is required for a
At the beginning of 2019, Ace Company had the following portfolio of investments in available-for-sale debt securities (all of which were acquired at par value): Security Cost 1/1/2019 Fair Value A $20,000 $25,000 B 30,000 29,000 Totals $50,000 $54,000 During 2019, the following transactions occurred: Transactions: May 3 Purchased C debt securities at their par value for $50,000. July 1 Sold all of the A securities for $25,000 plus interest of $1,000. Dec. 31 Received interest of $7,600 on the B and C securities. Additionally the following information was available: Security 12/31/19 Fair Value B $29,000 C 52,500 Required: 1. Prepare journal entries to record the preceding information. 2. What is the balance in the Unrealized Holding Gain/Loss account on December 31, 2019?

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		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