Assume all of the same facts and scenarios as E 12-30, except that Bloom Corporation classifies their Taylor investment as AFS.

In E12-30

Bloom Corporation purchased $1,000,000 of Taylor Company 5% bonds at par with the intent and ability to hold the bonds until they matured in 2025, so Bloom classifies their investment as HTM. Unfortunately, a combination of problems at Taylor Company and in the debt market caused the fair value of the Taylor investment to decline to $600,000 during 2018.

Required:

1. For each of the scenarios shown in E 12-30, prepare the appropriate entry(s) at December 31, 2018. Indicate how the scenario will affect the 2018 income statement, OCI, and comprehensive income.

2. Repeat requirement 1, but now assume that, at the end of 2017, Bloom had recorded a temporary unrealized loss (not an OTT impairment) of $100,000 on the Taylor investment.