Question: I need help with PART B ONLY: each bold line is for an entry Q2. On January 01, 2016, Delmon Company acquired Eagle Company 8%,

 I need help with PART B ONLY: each bold line is

for an entry Q2. On January 01, 2016, Delmon Company acquired Eagle

I need help with PART B ONLY: each bold line is for an entry

Q2. On January 01, 2016, Delmon Company acquired Eagle Company 8%, $5,000 face value bonds, as an investment, at their then fair value of $4,800. The bonds mature on December 31, 2020 and pay interest annually on December 31. Delmon has prepared a partial amortization schedule, along with information about the fair value of the bonds at the end of each year. (For simplicity, I assume Delmon uses straight-line amortization of the discount.) Fair Discount Amortized Cash Value FV minus Date Received Amortized Cost (AC) (FV) AC (Bond investment acquired) 01/01/2016 $4,800 $4,800 12/31/2016 40 4,840 4,600 12/31/2017 400 40 4,880 4,780 (100) 12/31/2018 400 40 4,920 12/31/2019 400 40 4,960 (Bond investment matures) 12/31/2020 Values not supplied 400 40 5,000 2,000 200 400 (240) Total A. Before considering any gains and losses on the Eagle Bond Investment resulting from changes in investment's fair value for 2016 and 2017, Delmon has the following 12/31/2017 balances: RE $1000 (cr.) and AOCI $3,000 (dr). Find the balances for RE and AOCI on 12/31/2017 after considering any and all gains and losses on the Eagle Bond Investment for 2016 and 2017. Find the balances for three different cases: (1) the bond investment is classified as HTM, (ii) the investment is classified as AFS, and (iii) the investment is classified as trading security. Calculations must be in good order and well-labelled, with a short explanation is required for each case. Indicate whether the account balance at 12/31/2017 is a debit or a credit. Answers (1) RE- AOCI - (ii) RE AOCI - (iii) RE- AOCI Calculations: Chapter 17 HW S22 B. Make journal entries related to interest expense and changes in fair value for 12/31/2016 and 12/312017 under three assumptions the bond investment is classified as HTM, (ii) the investment is classified as AFS, and (iii) the investment is classified as trading security. Indicate whether any gains or losses are in NI or OCI. Dates Accounts Dr CH i. ii. ill

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!