Question

The accounting records of Jamaican Importers, Inc., at January 1, 2018, included the following: Assets: Investment...

The accounting records of Jamaican Importers, Inc., at January 1, 2018, included the following:

Assets:
Investment in IBM common shares $ 2,345,000
Less: Fair value adjustment (245,000 )
$ 2,100,000


No changes occurred during 2018 in the investment portfolio.

Required:
Prepare appropriate adjusting entry(s) at December 31, 2018, assuming the fair value of the IBM common shares was:

1. $1,457,000

2. $2,118,000

3. $2,365,000

Business   Accounting   
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Answer #1

Solution:

Journal Entries - Jamaican Importers, Inc.
Event Particulars Debit Credit
1 Unrealized holding gain or loss - OCI Dr $643,000.00
       To Fair value adjustment ($2,100,000 - $1,457,000) $643,000.00
(To record adjustment to fair value)
2 Fair value adjustment Dr $18,000.00
       To Unrealized holding gain or loss - OCI $18,000.00
(To record adjustment to fair value)
3 Fair value adjustment Dr $265,000.00
       To Unrealized holding gain or loss - OCI $265,000.00
(To record adjustment to fair value)
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