Exercise 17-22 (Part Level Submission) Stellar Company has the following investm
ID: 2431707 • Letter: E
Question
Exercise 17-22 (Part Level Submission) Stellar Company has the following investments as of December 31, 2017 Investments in common stock of Laser Company Investment in debt securities of FourSquare Company $1,460,000 $3,230,000 In both investments, the carrying value and the fair value of these two investments are the same at December 31, 2017. Stellar's stock investments does not result in significant influence on the operations of Laser Company. Stellar's debt investment is considered held-to-maturity. At December 31, 2018, the shares in Laser Company are valued at $990,000; the debt investment securities of FourSquare are valued at $2,430,000. Assume that these investments are considered impaired Prepare the journal entries for these two securities at December 31, 2018, assuming that they are permanently impaired. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) DateAccount Titles and Explanation Debit Credit Dec. 31, 2018 (Entry for investments in Laser Company) (Entry for of investments in FourSquare Company)Explanation / Answer
Ans. (a)
Note : - Investment in Laser Company on 31 Dec 2017 = $1,460,000
Less :- share value of Laser Company on 31 Dec 2018 = $990,000
Loss on Investment in Leser Company $470,000
Investment in Foursquare Company on 31 Dec 2017 = $3,230,000
Less : Share value of Foursquare Company on 31 Dec 2018. = $2,430,000
Loss on Investment in Foursquare Company $800,000
DATE ACCOUNT TITALS & EXPLANATION DEBIT CREDIT 31 Dec. Loss on Investment in Laser Company $470,000 To Investment in Laser Comapany $470,000 (Being recorded impairment loss in Investment in common stock of Laser Co.) 31 Dec. Loss on Investment in Foursquare Company $800,000 To Investment in foursquare Company $800,000 (Being recorded impairment loss in investment in debt securities of foursquare company )Related Questions
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