Wang Corporation purchased $290,000 of Hales Incorporated bonds at par in 2023 with the intent and ability to hold the bonds until the bonds mature in 2028, so Wang classifies its investment as held-to-maturity. Unfortunately, a combination of problems at Hales and in the debt market caused the fair value of the Hales investment to decline to $247,000 during 2024. Wang applies the CECL model to account for its investment and calculates that, of the $43,000 drop in fair value, $10,000 of it relates to credit losses for amounts not expected to be collected, and the $33,000 remainder relates to noncredit losses. Wang's accounting for this impairment will reduce before-tax net income for 2024 Multiple Choice $0. $10,000. $33,000. $43,000.
Wang Corporation purchased $290,000 of Hales Incorporated bonds at par in 2023 with the intent and ability to hold the bonds until the bonds mature in 2028, so Wang classifies its investment as held-to-maturity. Unfortunately, a combination of problems at Hales and in the debt market caused the fair value of the Hales investment to decline to $247,000 during 2024. Wang applies the CECL model to account for its investment and calculates that, of the $43,000 drop in fair value, $10,000 of it relates to credit losses for amounts not expected to be collected, and the $33,000 remainder relates to noncredit losses. Wang's accounting for this impairment will reduce before-tax net income for 2024
Multiple Choice
$0.
$10,000.
$33,000.
$43,000.
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