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n stock of Laser Company   $1,350,000 Investment in debt securities of FourSquare Company   $3,280,000 In both investments, the carrying value and the fair value of these two investments are the same at December 31, 2020. Novak’s stock investments does not result in significant influence on the operations of Laser Company. Novak’s debt investment is considered held-to-maturity. At December 31, 2021, the shares in Laser Company are valued at $950,000; the debt investment securities of FourSquare are valued at $2,460,000 and are considered impaired. LIST OF ACCOUNTS Accumulated Other Comprehensive Loss

n stock of Laser Company   $1,350,000 Investment in debt securities of FourSquare Company   $3,280,000 In both investments, the carrying value and the fair value of these two investments are the same at December 31, 2020. Novak’s stock investments does not result in significant influence on the operations of Laser Company. Novak’s debt investment is considered held-to-maturity. At December 31, 2021, the shares in Laser Company are valued at $950,000; the debt investment securities of FourSquare are valued at $2,460,000 and are considered impaired. LIST OF ACCOUNTS Accumulated Other Comprehensive Loss

FINANCIAL ACCOUNTING
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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Question

Novak Company has the following investments as of December 31, 2020:

Investments in common stock of Laser Company   $1,350,000
Investment in debt securities of FourSquare Company   $3,280,000


In both investments, the carrying value and the fair value of these two investments are the same at December 31, 2020. Novak’s stock investments does not result in significant influence on the operations of Laser Company. Novak’s debt investment is considered held-to-maturity. At December 31, 2021, the shares in Laser Company are valued at $950,000; the debt investment securities of FourSquare are valued at $2,460,000 and are considered impaired.

LIST OF ACCOUNTS

  • Accumulated Other Comprehensive Loss
  • Allowance for Doubtful Accounts
  • Allowance to Reduce Inventory to Market
  • Bad Debt Expense
  • Bonds Payable
  • Cash
  • Call Option
  • Common Stock
  • Cost of Goods Sold
  • Debt Investments
  • Dividend Revenue
  • Dividend Receivable
  • Equity Investments
  • Fair Value Adjustment
  • Futures Contract
  • Gain on Sale of Investments
  • Gain on Settlement of Call Option
  • Gain on Settlement of Put Option
  • Interest Expense
  • Interest Receivable
  • Interest Revenue
  • Inventory
  • Investment Income
  • Loss on Impairment
  • Loss on Sale of Investments
  • Loss on Settlement of Call Option
  • Loss on Settlement of Put Option
  • No Entry
  • Notes Payable
  • Paid-in Capital in Excess of Par - Common Stock
  • Put Option
  • Recovery of Loss from Impairment
  • Retained Earnings
  • Revenue from Investment
  • Sales Revenue
  • Swap Contract
  • Unrealized Holding Gain or Loss - Equity
  • Unrealized Holding Gain or Loss - Income
  •  
Your answer is partially correct. Prepare the journal entry to record the impairment of the debt securities at December 31, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, Loss on Impairment 820000 2021 Debt Investments 820000
Transcribed Image Text:Your answer is partially correct. Prepare the journal entry to record the impairment of the debt securities at December 31, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, Loss on Impairment 820000 2021 Debt Investments 820000
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