Exercise 17-22 (Part Level Submission) Cullumber Company has the following inves
ID: 2538481 • Letter: E
Question
Exercise 17-22 (Part Level Submission) Cullumber Company has the following investments as of December 31, 2017: Investments in common stock of Laser Company Investment in debt securities of FourSquare Company $1,35o,000 $3,390,000 In both investments, the carrying value and the fair value of these two investments are the same at December 31, 2017. Cullumber's stock investments does not result in significant influence on the operations of Laser Company. Cullumber's debt investment is considered held-to-maturity. At December 31, 2018, the shares in Laser Company are valued at $910,000; the debt investment securities of FourSquare are valued at $2,530,000. Assume that these investments are considered impaired (a) Prepare the journal entries for these two securities at December 31, 2018, assuming that they are permanently impaired. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) DateAccount Titles and Explanation Debit Credit Dec. 31, 2018 (Entry for investments in Laser Company) (Entry for of investments in FourSquare Company,)Explanation / Answer
Impairment loss calculation:
Investment in Common stock
Investment in debt securities
Investment value as on December 31, 2017
1350000
3390000
Less: Investment value as on December 31, 2018
910000
2530000
Impairment loss
440000
860000
Journal entries
Date
Particulars
Amount ($)
Amount ($)
31.12.2018
Impairment loss
440000
Investment in common stock
440000
(Being impairment loss on investment in common stock recognized)
Impairment loss
860000
Investment in debt securities
860000
(Being impairment loss on investment in debt securities recognized)
Profit and loss account
1300000
Impairment loss
1300000
(Being impairment loss transferred to profit and loss account)
Impairment loss calculation:
Investment in Common stock
Investment in debt securities
Investment value as on December 31, 2017
1350000
3390000
Less: Investment value as on December 31, 2018
910000
2530000
Impairment loss
440000
860000
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