Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 16, Problem 16.19E
Debt Investment, Held to Maturity, Impairments. Gretta Company purchased a debt investment on June 15, 2017 and classified it as held to maturity On December 31, 2017, the investment had a carrying value of $8,500 and a fair value of $8,000. On that date, the present value of the future
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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…
(a.) Prepare any journal entries you consider necessary, including year end entries (December 31), assuming these investments are managed to profit from changes in market interest rates (held for trading). Mayor Company doesn’t have debt investment before 2020.
(b.) Prepare a partial statement of financial position showing the Investment account at December 31, 2020.
(c.) If Mayor Company purchase the debt investment to collect the contractual cash flow (held the debt investment to maturity), explain how the journal entries would differ from those in part (a).
On its December 31, 2024 balance sheet, Calhoun Company appropriately reported
a $10,000 debit balance in its Fair Value Adjustment account. There was no change
during 2025 in the composition of Calhoun's portfolio of debt investments held as
available-for-sale debt securities. The following information pertains to that
portfolio:
Security
XY N
B) $0.
OC) $40,000.
Cost
$130,000
OD) $30,000.
100,000
175,000
$405,000
The amount of unrealized loss reported as a component of comprehensive income
for the year ending December 31, 2025 is
OA) $20,000.
Fair value at 12/31/25
$160,000
90,000
125,000
$375,000
Chapter 16 Solutions
Intermediate Accounting (2nd Edition)
Ch. 16 - Prob. 16.1QCh. 16 - Is reporting an investment at its cost considered...Ch. 16 - Prob. 16.3QCh. 16 - Prob. 16.4QCh. 16 - Prob. 16.5QCh. 16 - Prob. 16.6QCh. 16 - What categories can managers use to classify...Ch. 16 - When is the equity method of accounting for...Ch. 16 - Prob. 16.9QCh. 16 - Can companies apply the fair value option to all...
Ch. 16 - What is the fair value hierarchy for investment...Ch. 16 - Prob. 16.12QCh. 16 - Prob. 16.13QCh. 16 - Prob. 16.14QCh. 16 - Prob. 16.15QCh. 16 - Prob. 16.16QCh. 16 - Prob. 16.17QCh. 16 - Deutsch Imports has three securities in its...Ch. 16 - Prob. 16.2MCCh. 16 - Prob. 16.3MCCh. 16 - Prob. 16.4MCCh. 16 - Prob. 16.5MCCh. 16 - Prob. 16.6MCCh. 16 - Prob. 16.7MCCh. 16 - Prob. 16.1BECh. 16 - Prob. 16.2BECh. 16 - Debt Investments, Trading. Using the information...Ch. 16 - Prob. 16.4BECh. 16 - Prob. 16.5BECh. 16 - Prob. 16.6BECh. 16 - Prob. 16.7BECh. 16 - Prob. 16.8BECh. 16 - Prob. 16.9BECh. 16 - Prob. 16.10BECh. 16 - Prob. 16.11BECh. 16 - Prob. 16.12BECh. 16 - Prob. 16.13BECh. 16 - Notes Receivable. Aaron Anatole accepted a...Ch. 16 - Prob. 16.15BECh. 16 - Prob. 16.16BECh. 16 - Prob. 16.17BECh. 16 - Debt Investments. Impairments. IFRS. For each debt...Ch. 16 - Prob. 16.19BECh. 16 - Prob. 16.1ECh. 16 - Prob. 16.2ECh. 16 - Prob. 16.3ECh. 16 - Prob. 16.4ECh. 16 - Prob. 16.5ECh. 16 - Prob. 16.6ECh. 16 - Prob. 16.7ECh. 16 - Debt and Equity Investments, Available-for-Sale...Ch. 16 - Prob. 16.9ECh. 16 - Equity Investments without a Readily Determinable...Ch. 16 - Prob. 16.11ECh. 16 - Prob. 16.12ECh. 16 - Prob. 16.13ECh. 16 - Equity-Investments, Equity Method. Book Value of...Ch. 16 - Prob. 16.15ECh. 16 - Prob. 16.16ECh. 16 - Notes Receivable. Each of the following three...Ch. 16 - Notes Receivable. On January 1, 2018, Racine...Ch. 16 - Debt Investment, Held to Maturity, Impairments....Ch. 16 - Debt Investment, Impairments, IFRS. Repeat E16-19...Ch. 16 - Prob. 16.21ECh. 16 - Prob. 16.22ECh. 16 - Prob. 16.23ECh. 16 - Prob. 16.24ECh. 16 - Prob. 16.25ECh. 16 - Prob. 16.1PCh. 16 - Debt Investments, Trading. Freder Software Group...Ch. 16 - Prob. 16.3PCh. 16 - Equity Investments, Readily Determinable Fair...Ch. 16 - Prob. 16.5PCh. 16 - Prob. 16.6PCh. 16 - Prob. 16.7PCh. 16 - Prob. 16.8PCh. 16 - Prob. 16.9PCh. 16 - Prob. 16.10PCh. 16 - Prob. 16.11PCh. 16 - Equity Investments, Equity Method, Fair Value...Ch. 16 - Prob. 16.13PCh. 16 - Prob. 16.14PCh. 16 - Prob. 16.15PCh. 16 - Prob. 16.16PCh. 16 - Prob. 16.17PCh. 16 - Prob. 16.18PCh. 16 - Prob. 16.19PCh. 16 - Prob. 1JCCh. 16 - Prob. 2JCCh. 16 - Prob. 1SSCCh. 16 - Prob. 1BCCCh. 16 - Prob. 2BCC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 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?arrow_forwardOn January 1, 2018, an entity purchased bonds with face amount of P5,000,000. The entity paid P4,500,000 plus transaction cost of P168,600. The bonds mature on December 31, 2020 and pay 6% interest annually on December 31 of each year with 8% effective yield. The bonds were quoted at 105 on December 31, 2018 and 110 on December 31, 2019.The business model in managing the financial asset is to collect contractual cash flows that are solely payments of principal and interest and also to sell the bonds in the open market. The entity has not elected the fair value option. On December 31, 2019, the entity changed its business model to collect only contractual cash flows. On December 31, 2020, the bonds are quoted at 115 and the market interest rate is 10%. find the following: 1. What amount of unrealized gain should be reported as component of OCI in the statement of comprehensive income for 2018? 2. What amount of unrealized gain should be reported as component of OCI in the statement of…arrow_forwardDebt Investments Classification Cost orAmortized Cost Fair Valueat end if 2017 Interest Incomein 2017 Sales Pricein 2018 Trading $15,000 $14,000 $750 $14,500 Available-for-Sale $18,000 $15,000 $1,000 $16,000 Held-to-Maturity $24,000 $25,500 $950 For the Houston Company, what is the unrealized gain or loss that will appear in the Accumulated Other Comprehensive Account in 2017? Select one: a. $1,500 gain b. $4,000 Loss c. $2,500 Loss d. $1,000 Loss e. $3,000 Loss PreviousSave AnswersNextarrow_forward
- A company buys a debt investment for $316, 000. At the end of 2023, the amortized cost of the investment is $315,000 and the fair value of the investment is $322, 000. The company intends to hold the investment until maturity and does not intend to use the fair value option. Therefore, the company must report the investment at $316,000 on its 2023 year-end balance sheet. True or Falsearrow_forwardCarla 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 $50,300 Fair value 40,600 Expected credit losses 12,200 (a) What is the amount of the credit loss that Carla should report on this available-for-sale security at December 31, 2020? Amount of the credit loss $arrow_forwardAt December 31, 2020, the available-for-sale debt investment for Zorro Community Bancorp has amortized cost of $268,000 and fair market value of $273,500. Securities fair value adjustment beginning balance of the period is Dr. 5,400. Assume the available-for-sale debt securities investment is the only item that affects other comprehensive income (OCI) and accumulated other comprehensive income (AOCI) for Zorro. At what amount should other comprehensive income (OCI) be reported on the comprehensive income statement of Zorro for fiscal year 2020? $5,400 O $100 O $273,500 O $268,000 O $5,500arrow_forward
- Information On its December 31, 2024 balance sheet, Pharoah Company appropriately reported a $10,000 debit balance in its Fair Value Adjustment account. There was no change during 2025 in the composition of Pharoah's portfolio of debt investments held as available-for- sale debt securities. The following information pertains to that portfolio: Security Date 11/1/2026 XYN Z Cost Instructions Record the year-end entry to adjust the debt investments to fair value. Account $138,000 108000 191000 $437,000 Debit Fair value at 12/31/25 $172,000 96000 141000 $409,000 Creditarrow_forwardOn January 1, 2017, KLM Company purchased bonds with faceamount of 5,000,000. The entity paid 4,600,000 plus transaction cost of 142,290. The bonds mature on December 31, 2019 and pay 6% interest annually on December 31 of each year with 8% effective yield. The bonds were quoted at 106.5 on December 31, 2017 and 108 on December 31, 2018. Assume that the business model in managing financial asset is to collect contractual cash flows that are solely for payment of principal and interest and also to sell the bonds in an open market. What is the balance of unrealized gain-OCI on December 31, 2017?arrow_forwardAssume that the debt investment in FourSquare Company was available-for-sale and the expected credit loss was $960,000. Prepare the journal entry to record this impairment on December 31, 2021.arrow_forward
- Accounting for debt investments On February 1, 2018, Bell Co. decides to invest excess cash of $16,800 by purchasing a Grant, Inc. bond at face value. At year-end, December 31, 2018, the fair value of the Grant bond was $19,600. The investment is categorized as a trading debt investment. Requirements Journalize the transactions for Bell’s investment in Grant, Inc. for 2018. In what category and at what value would Bell report the asset on the December 31, 2018, balance sheet? In what account would the market price change in Grant’s bond be reported, if at all? What was the net effect of the investment on Bell’s net income for the year ended December 31, 2018?arrow_forwardMorley 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 $50,000 Fair value 40,000 Expected credit loss 12,000 a. What is the amount of the credit loss that Morley should report on this available-for-sale security at December 31, 2020? b. Prepare the journal entry to record the credit loss, if any (and any other adjustment needed), at December 31, 2020. c. Assume that the fair value of the available-for-sale security is $53,000 at December 31, 2020, instead of $40,000. What is the amount of the credit loss that Morley should report at December 31, 2020? d. Assume the same information as for part (c). Prepare the journal entry to record the credit loss, if necessary (and any other adjustment needed), at December 31, 2020.arrow_forwardMercer Corporation acquired $400,000 of Park Company’s bonds on June 30, 2018, for $409,991.12. The bonds carry a 12% stated interest rate and pay interest semiannually on June 30 and December 31. The appropriate market interest rate is 11%, and the bonds are due June 30, 2021. Required: 1. Prepare an investment interest income and premium amortization schedule, using the: a. straight-line method b. effective interest method 2. Prepare journal entries to record the December 31, 2018, and December 31, 2020, interest receipts using both methods.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Financial instruments products; Author: fi-compass;https://www.youtube.com/watch?v=gvxozM3TUIg;License: Standard Youtube License