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Stewart Enterprises has the following investments, all purchased prior to 2018. during as an for normally during 2019 (with no select “No journal entry required” in the first eccount field.) had a fair value of $3.510,000, and Stewart calculated that $260,000 of the fair value decline d that $150,000 of the difference between fair value and amortized cost was a credit loss and $180.000 was a e of $210.000, 31, such that the carrying value of the Oliver 2018. the Oliver investment had a fair value of $2,210.000, and Stewart ca $2,740,000. $410,000, such that the carrying value of the Jones 31, 2018, the Jones had a fair value of $2,710,000, and Stewart calculated that $230.000 of the d had a fair value of $2.920,000, and Stewart calculated that $130,000 of the difference betweer credit loss and $480,000 is a noncredit loss
Expert Answer
Solution:
Preparing Appropriate Adjusting Journal Entries for each Investment, to Account for the Fair Value Changes During 2018 and 2019:
1. Bee Company Investment:
| Date | General Journal | Debit | Credit |
| 2018 | Other-than-temporary impairment loss – I/S | $260,000 | |
| Discount on bond investment | $260,000 | ||
| 2018 | OTT impairment loss – OCI | $270,000 | |
| Fair value adjustment – Noncredit loss | $270,000 |
2. Oliver Corporation Investment:
| Date | General Journal | Debit | Credit |
| 2018 | Net unrealized holding gains and losses – I/S | $110,000 | |
| Fair value adjustment | $110,000 | ||
| 2019 | Fair value adjustment | $530,000 | |
| Net unrealized holding gains and losses – I/S | $530,000 |
3. Jones Inc., Investment:
| Date | General Journal | Debit | Credit |
| 2018 | Other-than-temporary impairment loss – I/S | $230,000 | |
| Discount on Jones Bonds | $230,000 | ||
| 2018 | Net unrealized holding gains and losses – OCI | $590,000 | |
| Fair value adjustment | $590,000 | ||
| 2018 | Fair value adjustment | $410,000 | |
| Net unrealized holding gains and losses – OCI | $410,000 | ||
| 2018 | Net unrealized holding gains and losses – OCI | $180,000 | |
| Fair value adjustment | $180,000 | ||
| 2019 | Fair value adjustment | $210,000 | |
| Net unrealized holding gains and losses – OCI | $210,000 |
