In: Accounting
Ticker Services began operations in 2015 and maintains long-term investments in available-for-sale securities. The year-end cost and fair values for its portfolio of these investments follow.
Portfolio of Available-for-Sale Securities | Cost | Fair Value | ||||
December 31, 2015 | $ | 378,870 | $ | 367,504 | ||
December 31, 2016 | 431,912 | 457,827 | ||||
December 31, 2017 | 587,400 | 694,894 | ||||
December 31, 2018 | 886,974 | 789,407 | ||||
Prepare journal entries to record each year-end fair value adjustment for these securities.
Complete this question by entering your answers in the tabs below.
Calculation
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Record the year-end adjusting entry for the securities portfolio as of December 31, 2015, 2016, 2017, 2018
Solution :
31-Dec-15 | Existing balance in Fair Value Adjustment-AFS (LT) | $0.00 |
Required balance in Fair Value Adjustment-AFS (LT) ($367,504 - $378,870) | -$11,366.00 | |
Adjustment required to Fair Value Adjustment-AFS (LT) | -$11,366.00 | |
31-Dec-16 | Existing balance in Fair Value Adjustment-AFS (LT) | -$11,366.00 |
Required balance in Fair Value Adjustment-AFS (LT) ($457,827 - $431,912) | $25,915.00 | |
Adjustment required to Fair Value Adjustment-AFS (LT) | $37,281.00 | |
31-Dec-17 | Existing balance in Fair Value Adjustment-AFS (LT) | $25,915.00 |
Required balance in Fair Value Adjustment-AFS (LT) ($694,894 - $587,400) | $107,494.00 | |
Adjustment required to Fair Value Adjustment-AFS (LT) | $81,579.00 | |
31-Dec-18 | Existing balance in Fair Value Adjustment-AFS (LT) | $107,494.00 |
Required balance in Fair Value Adjustment-AFS (LT) ($789,407 - $886,974) | -$97,567.00 | |
Adjustment required to Fair Value Adjustment-AFS (LT) | -$205,061.00 |
Journal Entries - Ticker Services | |||
Date | Particulars | Debit | Credit |
31-Dec-15 | Unrealised holding gain or loss - OCI Dr | $11,366.00 | |
To Fair value adjustment - AFS (LT) | $11,366.00 | ||
(To record fair value adjustment for available for sale securities) | |||
31-Dec-16 | Fair value adjustment - AFS (LT) Dr | $37,281.00 | |
To Unrealised holding gain or loss - OCI | $37,281.00 | ||
(To record fair value adjustment for available for sale securities) | |||
31-Dec-17 | Fair value adjustment - AFS (LT) Dr | $81,579.00 | |
To Unrealised holding gain or loss - OCI | $81,579.00 | ||
(To record fair value adjustment for available for sale securities) | |||
31-Dec-18 | Unrealised holding gain or loss - OCI Dr | $205,061.00 | |
To Fair value adjustment - AFS (LT) | $205,061.00 | ||
(To record fair value adjustment for available for sale securities) |