Indigo Corporation owns shares of Raccoon Company that are classified as part of Indigo's trading portfolio and accounted for using the fair value through net income model. At December 31, 2021, the securities were carried in Indigo's  accounting records at their cost of $418,000, which equaled their fair value. On November 1, 2022, when the securities fair value was $442,000, Indigo declared property dividend that will result in Raccoon’s securities being distributed on December 15, 2022 to the shareholders of record on December 1, 2022.

Prepare the journal entries for all three dates.

Date	Account Titles and Explanation	Debit	Credit
Nov. 1, 2022Dec. 1, 2022Dec. 15, 2022
	(To record fair value adjustment)
	(To record declaration of property dividend)
Nov. 1, 2022Dec. 1, 2022Dec. 15, 2022
Nov. 1, 2022Dec. 1, 2022Dec. 15, 2022

 

Answer rating: 100% (QA)

Step 1 Change in fair value is recognized as unrealized gain or loss Step 2 Date account title ... View the full answer