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25 March, 15:20

Exercise 15-7 Adjusting available-for-sale securities to fair value LO P3 On December 31, 2017, Reggit Company held the following short-term investments in its portfolio of available-for-sale securities. Reggit had no short-term investments in its prior accounting periods. Prepare the December 31, 2017, adjusting entry to report these investments at fair value.

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  1. 25 March, 17:35
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    debit unrealized loss-equity $15,000

    credit fair value adjustment - Available-for-sale $15,000

    Explanation:

    Cost:

    Verizano corporation bonds payable - 61,400

    Preble corporation notes payable - 53,100

    Lucerne company common stock - 88500

    Fair value:

    Verizano corporation bonds payable - 56,200

    Preble corporation notes payable - 44,600

    Lucerne company common stock - 85, 200

    Total:

    Cost = $ (61,400 + 53100 + 88500) = $203,000

    Fair value = $ (56,200 + 44600 + 85200) = $188,000

    Unrealized amount = cost - fair value

    $203,000 - $188000 = ($15000) loss

    debit unrealized loss-equity $15,000

    credit fair value adjustment - Available-for-sale (ST) $15,000
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Home » Business » Exercise 15-7 Adjusting available-for-sale securities to fair value LO P3 On December 31, 2017, Reggit Company held the following short-term investments in its portfolio of available-for-sale securities.
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