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Sarasota Technologies Inc. held a portfolio of shares and bonds that it accounted for using the fair value through other comprehensive income model at December

Sarasota Technologies Inc. held a portfolio of shares and bonds that it accounted for using the fair value through other comprehensive income model at December 31, 2020. This was the first year that Sarasota had purchased investments. In part due to Sarasotas inexperience, by December 31, 2020, the market value of the portfolio had dropped $28,400 below its original cost. Sarasota recorded the necessary adjustments at December 31, 2020 and was determined to hold the securities until the unrealized loss of 2020 could be recovered. By December 31, 2021, Sarasotas goals of recovery had been realized and the original portfolio of shares and bonds had a fair market value $6,800 higher than the original purchase costs. Sarasotas income tax rate is 30% for all years. Assume that any gains that will ultimately be realized on the sale of the shares and bonds are taxable as ordinary income when they are realized. Sarasota applies IFRS.

Prepare the journal entries at December 31, 2021 to accrue the unrealized gain on the securities and the related income tax. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

December 31, 2021

(To record fair value adjustment)

December 31, 2021

(To record deferred taxes on fair value adjustment)

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