Question

A company (the investor) purchased $800,000 of 9%, 10-year bonds from the investee on January 1,...

A company (the investor) purchased $800,000 of 9%, 10-year bonds from the investee on January 1, 2020 and classified the bonds as available-for-sale. The bonds sold for $658,250. Using the effective-interest method, the investor company amortized the premium/discount for the investee bonds by $114 and $231 on 12/31/2020 and 12/31/2021, respectively (assumed).

At December 31, 2020, the fair value of the investee bonds was $833,000.

At December 31, 2021, the fair value of the investee bonds was $932,000.

What should the investor company report as unrealized holding gains or losses for the year ended on 12/31/2021?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A company (the investor) purchased $800,000 of 9%, 10-year bonds from the investee on January 1,...
A company (the investor) purchased $800,000 of 9%, 10-year bonds from the investee on January 1, 2020 and classified the bonds as available-for-sale. The bonds sold for $656,250. Using the effective-interest method, the investor company amortized the premium/discount for the investee bonds by $143 and $248 on 12/31/2020 and 12/31/2021, respectively (assumed). At December 31, 2020, the fair value of the investee bonds was $855,000. At December 31, 2021, the fair value of the investee bonds was $946,000. What should...
A company (the investor) purchased $39,000 of 8%, 5-year bonds from the investee on January 1,...
A company (the investor) purchased $39,000 of 8%, 5-year bonds from the investee on January 1, 2020. The bonds sold for $42,800. Using the effective-interest method, the investor company amortized the premium/discount for the investee bonds by $277 and $334 on 12/31/2020 and 12/31/2021, respectively At December 31, 2020, the fair value of the investee bonds was $30,000. At December 31, 2021, the fair value of the investee bonds was $51,000 What should the investor company report as unrealized holding...
An investor company owns 30% of the common stock of an investee company. The investor has...
An investor company owns 30% of the common stock of an investee company. The investor has significant influence over the investee, and acquired its equity interest in the investee on January 1, 2018 for $525,000. On the date of acquisition, the investee’s stockholders equity was $1,500,000, and the fair values of the investee’s individual net assets were equal to their reported book values. During the year ended December 31, 2018, the investee reported net income of $50,000 and dividends of...
On January 1, 2013, an investor purchases 28,000 common shares of an investee at $12 (cash)...
On January 1, 2013, an investor purchases 28,000 common shares of an investee at $12 (cash) per share. The shares represent 20% ownership in the investee. The investee's common stock does not have a readily determinable fair value. On January 1, 2013, the book value of the investee's assets and liabilities equals $900,000 and $200,000, respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values, except for a customer list. On...
Pierce Company issued 11% bonds, dated January 1, with a face amount of $800,000 on January...
Pierce Company issued 11% bonds, dated January 1, with a face amount of $800,000 on January 1, 2018. The bonds sold for $739,816 and mature in 2037 (20 years). For bonds of similar risk and maturity the market yield was 12%. Interest is paid semiannually on June 30 and December 31. Pierce determines interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2018, the fair value of the bonds...
On January 1, 2013, an investor purchases 16,000 common shares of an investee at $12 (cash)...
On January 1, 2013, an investor purchases 16,000 common shares of an investee at $12 (cash) per share. The shares represent 20% ownership in the investee. The investee shares are not considered "marketable" because they do not trade on an active exchange. On January 1, 2013, the book value of the investee's assets and liabilities equals $900,000 and $200,000, respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values, except for...
On January 1, 2013, an investor purchases 15,000 common shares of an investee at $12 (cash)...
On January 1, 2013, an investor purchases 15,000 common shares of an investee at $12 (cash) per share. The shares represent 20% ownership in the investee. The investee shares are not considered "marketable" because they do not trade on an active exchange. On January 1, 2013, the book value of the investee's assets and liabilities equals $900,000 and $200,000, respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values, except for...
Beresford Inc. purchased several investments in debt securities during 2020, its first year of operations. The...
Beresford Inc. purchased several investments in debt securities during 2020, its first year of operations. The following information pertains to these securities. The fluctuations in their fair values are not considered permanent. Held-to-Maturity Securities: Fair Value 12/31/2020 Fair Value 12/31/2021 Amortized Cost 12/31/2020 Amortized Cost 12/31/2021 ABC Co. Bonds $ 385,000 $ 410,000 $ 377,500 $ 370,000 Trading Securities: Fair Value 12/31/2020 Fair Value 12/31/2021 Cost DEF Co. Bonds $ 55,000 $ 66,000 $ 69,100 GEH Inc. Bonds $ 57,000...
On January 1, 2018, Hoosier Company purchased $944,000 of 10% bonds at face value. The bond...
On January 1, 2018, Hoosier Company purchased $944,000 of 10% bonds at face value. The bond market value was $987,000 on December 31, 2018. Required: Prepare the appropriate journal entry on December 31, 2018, to properly value the bonds assuming the bonds are classified as: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Trading securities. Securities available for sale. Held-to-maturity securities. Record the unrealized holding gain or loss for trading...
On January 1, 2020, Martinez Company purchased 12% bonds, having a maturity value of $274,000 for...
On January 1, 2020, Martinez Company purchased 12% bonds, having a maturity value of $274,000 for $294,773.26. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Martinez Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows....