On December 31, 2019, Criterion Company provided the following information related to its portfolio of equity investments. The company holds a less than 20% interest in all equity investments.
The set of transactions are all related, your account balances should be carried forward and used for subsequent entries.
|
Investments |
Cost |
Fair Value |
|
Clemson Corp. stock |
$20,000 |
$19,000 |
|
Rocky Mountain Corp stock |
10,000 |
9,000 |
|
Buffalo Bills Corp stock |
20,000 |
20,600 |
|
Total of portfolio |
$50,000 |
$48,600 |
|
Previous fair value adjustment balance (December 31, 2018)-Credit Balance. |
$1,500 |
During 2020, Rocky Mountain Corporation's stock was sold. On December 31, 2020, Criterion Company had the following information available related to its portfolio of securities.
|
Investments |
Cost |
Fair Value |
|
Clemson Corp. stock |
$20,000 |
$19,100 |
|
Buffalo Bills Corp stock |
20,000 |
20,500 |
|
Total of portfolio |
$40,000 |
$39,600 |
On December 31, 2021, Criterion Company had the following information available related to its portfolio of securities. The previous balance for the Fair Value Adjustment Account for debt securities has a zero balance.
|
Investments |
Cost |
Fair Value |
|
Clemson Corp. stock |
$20,000 |
$18,000 |
|
Buffalo Bills Corp stock |
20,000 |
19,600 |
|
Total of portfolio |
$40,000 |
$37,600 |
| Date | General Journal | Debit | Credit |
| December 31, 2019 | Fair value adjustment | 100 | |
| Unrealized holding gain | 100 | ||
| December 31, 2020 | Fair value adjustment | 1000 | |
| Unrealized holding gain | 1000 | ||
| December 31, 2021 | Unrealized holding loss | 2000 | |
| Fair value adjustment | 2000 |
Working:
| Cost | Fair Value | Unrealized gain (loss) | |
| December 31, 2019 | 50000 | 48600 | -1400 |
| Existing balance in fair value adjustment (credit) | 1500 | ||
| Balance required (credit) | 1400 | ||
| Adjustment (debit) | 100 | ||
| December 31, 2020 | 40000 | 39600 | -400 |
| Existing balance in fair value adjustment (credit) | 1400 | ||
| Balance required (credit) | 400 | ||
| Adjustment (debit) | 1000 | ||
| December 31, 2021 | 40000 | 37600 | -2400 |
| Existing balance in fair value adjustment (credit) | 400 | ||
| Balance required (credit) | 2400 | ||
| Adjustment (credit) | 2000 | ||
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