Ayayai Co. has a held-to-maturity investment in the bonds of Schuyler Corp. with a carrying value of $56,800. Ayayai determined that due to poor economic prospects for Schuyler, the bonds have decreased in value to $48,100. It is determined that this loss in value is uncollectible. Prepare the journal entry, if any, to record the reduction in value.

Question

Business

Diana Silva

6 February, 20:32

Ayayai Co. has a held-to-maturity investment in the bonds of Schuyler Corp. with a carrying value of $56,800. Ayayai determined that due to poor economic prospects for Schuyler, the bonds have decreased in value to $48,100. It is determined that this loss in value is uncollectible. Prepare the journal entry, if any, to record the reduction in value.

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Answers (1)

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Adalyn Lang · Answer 1

journal entry are as given below

Explanation:

given data

carrying value = $56,800

bonds decreased value = $48,100

solution

we know that here impairment loss for organization when future estimate value of assets is less than carrying value of assets

and all loss and expenses are debit

and by the impairment loss value of investment decline so maturity id credit

so here

impairment loss is

impairment loss = carrying loss - decrease value ... 1

impairment loss = $56,800 - $48,100

impairment loss = $8700

so journal entry are as

date title Debit Credit

Impairment loss $8700

investment held to maturity $8700