Thornhill Corporation has excess cash resulting from extremely successful operations. It has decided to invest this cash in debt and equity securities as follows to be held as non-strategic investments:
On December 31, 2014, the fair values of the investments held by Thornhill Corporation were: Logitech, $0.90; Gildan Activewear, $101.00; and Winston, $14.00. Assume the fair value and carrying value of the Sharp bond was equal.
Required 1. Prepare an amortization schedule for 2014 and 2015 regarding the Sharp Inc. bond. 2. Prepare journal entries to record the investment activity, including the impairment adjustment on December 31, 2014. 3. Show how the investments will be reported on the December 31, 2014, balance sheet. Analysis Component: If the December 31, 2014, impairment adjustment on the Logitech shares were not recorded by Thornhill Corporation, would the February 6, 2015, journal entry be affected?Explain.