Question: LED Corporation owns 1 000 000 of Branch Pharmaceuticals bonds and classifies its
LED Corporation owns $1,000,000 of Branch Pharmaceuticals bonds and classifies its investment as securities available-for-sale. The market price of Branch's bonds fell by $450,000, due to concerns about one of the company's principal drugs. The concerns were justified when the FDA banned the drug. $100,000 of that decline in value already had been included in OCI as a temporary unrealized loss in a prior period. LED views $200,000 of the $450,000 loss as related to credit losses, and the other $250,000 as noncredit losses. LED does not plan to sell the investment and does not think it is more likely than not that it will have to sell the investment before fair value recovers. What journal entries should LED record to account for the decline in market value in the current period? How should the decline affect net income and comprehensive income?
Relevant QuestionsWickum Corporation reports under IFRS, and recognized a $500,000 other-than-temporary impairment of an HTM debt investment in Right Corporation. Subsequently, the fair value of Wickum's investment in Right increased by ...Loreal-American Corporation purchased several marketable securities during 2011. At December 31, 2011, the company had the investments in common stock listed below. None was held at the last reporting date, December 31, ...As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Inc.'s 400,000 shares for $480,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book ...On January 2, 2011, Sanborn Tobacco, Inc., bought 5% of Jackson Industry's capital stock for $90 million as a temporary investment. Sanborn realized that these securities normally would be classified as available-for-sale, ...Access the FASB's Codification Research System at the FASB website (www.fasb.org).Required:Determine the specific citation for accounting for each of the following items:1. Unrealized holding gains for trading securities ...
Post your question