A company buys a debt investment for $316, 000. At the end of 2023, the amortized cost of the investment is $315,000 and the fair value of the investment is $322, 000. The company intends to hold the investment until maturity and does not intend to use the fair value option. Therefore, the company must report the investment at $316,000 on its 2023 year-end balance sheet. True or False

A company buys a debt investment for $316, 000. At the end of 2023, the amortized cost of the investment is $315,000 and the fair value of the investment is $322, 000. The company intends to hold the investment until maturity and does not intend to use the fair value option. Therefore, the company must report the investment at $316,000 on its 2023 year-end balance sheet. True or False

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On its December 31, 2020 balance sheet, Wildhorse Company appropriately reported a $10,000 debit balance in its Fair Value Adjustment account. There was no change during 2021 in the composition of Wildhorse’s portfolio of debt investments held as available-for-sale debt securities. The following information pertains to that portfolio: Security Cost Fair value at 12/31/21 X $148000 $187000 Y 118000 103500 Z 211000 161000 $477000 $451500 The amount of unrealized loss to appear as a component of comprehensive income for the year ending December 31, 2021 is $24500. $35500. $39000. $0.
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At December 31, 2020, the available-for-sale debt portfolio for Steffi Graf, Inc. is as follows. Security Cost Fair Value Unrealized Gain (Loss) A $17,500 $15,000 ($2,500) B 12,500 14,000 1,500 C 23,000 25,500 2,500 Total $53,000 $54,500 1,500 Previous fair value adjustment balance—Dr. 400 Fair value adjustment—Dr. $1,100 On January 20, 2021, Steffi Graf, Inc. sold security A for $15,100. The sale proceeds are net of brokerage fees. Assume that Steffi Graf, Inc. reports net income in 2020 of $120,000 and in 2021 of $140,000. Total holding gains (including any realized holding gain or loss) equal $40,000 in 2021. Instructions a. Prepare a statement of comprehensive income for 2020, starting with net income. b. Prepare a statement of comprehensive income for 2021, starting with net income.
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On January 1, 2020, Oceanic Bank made a P1,000,000 8% loan. The P80,000 interest is receivable at the end of each year, with the principal amount to be received at the end of five years. At the end of 2020, the first year's interest of P80,000 has not ye been received because the borrower is experiencing financial difficulties. The borrower negotiate a restructuring of the loan. The payment of all the interest for 5 years will be delayed until the end of the 5-year loan term. In addition, the amount of principal repayment will be dropped from P1,000,000 to P500,000. The PV of 1 at 8% for 4 periods is .735. No interest revenue has been recognized in 2020 in connection with the loan. What amount should be reported as interest income for 2021? * a.80,000 b.52,920 c.48,960 d.0
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