Fair Value Journal Entries, Available-for-Sale Investments The investments of St

Question

Fair Value Journal Entries, Available-for-Sale Investments The investments of Steelers Inc. include a single investment: 6,200 shares of Bengals Inc. common stock purchased on September 12, Year 1, for $12 per share including brokerage commission. These shares were classified as available-for-sale securities. As of the December 31, Year 1, balance sheet date, the share price declined to $9 per share. a. Journalize the entries to acquire the investment on September 12 and record the adjustment to fair value on December 31, Year 1. Year 1 Sept. 12 Year 1 Dec. 31 b. How is the unrealized gain or loss for available-for-sale investments disclosed on the financial statements? Unrealized Gain (Loss) on Available-for-Sale Investments is reported in the of the

Explanation / Answer

Unrealized loss = 6,200 * 3 = 18,600.

Unrealized loss on available for sale securities is reported in other comprehensive income statement and reduces the investment value in balance sheet.

*Hope the above explanation helps, please comment if further explanation is required. Your rating is appreciated*

Date Account Debit Credit Sep.12 Investment in shares of bengals 74400 Cash 74400 [Entry to record purchase of shares] Dec.31 Unrealized loss on avaiable for sale securities - OCI 18600 Investment in shares of bengals 18600

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.