Question

At December 31, 2020, the available-for-sale debt portfolio for Crane, Inc. is as follows.

Security		Cost		Fair Value		Unrealized Gain (Loss)
A		$17,600		$16,000		$(1,600	)
B		11,100		15,500		4,400
C		24,000		25,800		1,800
Total		$52,700		$57,300		4,600
Previous fair value adjustment balance—Dr.						500
Fair value adjustment—Dr.						$4,100

On January 20, 2021, Crane, Inc. sold security A for $16,100. The sale proceeds are net of brokerage fees.

Crane, Inc. reports net income in 2020 of $124,000 and in 2021 of $147,000. Total holding gains (including any realized holding gain or loss) equal $43,000 in 2021.

Prepare a statement of comprehensive income for 2020, starting with net income.

CRANE, INC Statement of Comprehensive Income                                                                       For the Month Ended December 31, 2020December 31, 2020For the Year Ended December 31, 2020
Comprehensive IncomeHolding GainsHolding LossNet IncomeOther Comprehensive IncomeReclassification Adjustment for Gain Included in Net IncomeReclassification Adjustment for Loss Included in Net IncomeUnrealized Holding GainUnrealized Holding Loss				$
Comprehensive IncomeHolding GainsHolding LossNet IncomeOther Comprehensive IncomeReclassification Adjustment for Gain Included in Net IncomeReclassification Adjustment for Loss Included in Net IncomeUnrealized Holding GainUnrealized Holding Loss
Comprehensive IncomeHolding GainsHolding LossNet IncomeOther Comprehensive IncomeReclassification Adjustment for Gain Included in Net IncomeReclassification Adjustment for Loss Included in Net IncomeUnrealized Holding GainUnrealized Holding Loss
Comprehensive IncomeHolding GainsHolding LossNet IncomeOther Comprehensive IncomeReclassification Adjustment for Gain Included in Net IncomeReclassification Adjustment for Loss Included in Net IncomeUnrealized Holding GainUnrealized Holding Loss				$

Prepare a statement of comprehensive income for 2021, starting with net income.

CRANE, INC
Statement of Comprehensive Income
                                                                      For the Year Ended December 31, 2021For the Month Ended December 31, 2021December 31, 2021

                                                                      Comprehensive IncomeNet IncomeOther Comprehensive IncomeReclassification Adjustment for Gain Included in Net IncomeReclassification Adjustment for Loss Included in Net IncomeUnrealized Holding GainsUnrealized Holding Loss

$

                                                                      Comprehensive IncomeNet IncomeOther Comprehensive IncomeReclassification Adjustment for Gain Included in Net IncomeReclassification Adjustment for Loss Included in Net IncomeUnrealized Holding GainsUnrealized Holding Loss

                                                                      Comprehensive IncomeNet IncomeOther Comprehensive IncomeReclassification Adjustment for Gain Included in Net IncomeReclassification Adjustment for Loss Included in Net IncomeUnrealized Holding GainsUnrealized Holding Loss

$

                                                                      Add Less:                                                                       Comprehensive IncomeNet IncomeOther Comprehensive IncomeReclassification Adjustment for Gain Included in Net IncomeReclassification Adjustment for Loss Included in Net IncomeUnrealized Holding GainsUnrealized Holding Loss

                                                                      Comprehensive IncomeNet IncomeOther Comprehensive IncomeReclassification Adjustment for Gain Included in Net IncomeReclassification Adjustment for Loss Included in Net IncomeUnrealized Holding GainsUnrealized Holding Loss

$

                                                                      Current Period Other Comprehensive income accumulated Other Comprehensive IncomeBeginning Balance, January 1, 2021Ending Balance, December 31, 2021Amount Reclassified from Accumulated Other Comprehensive IncomeUnrealized Holding Gains

                                                                      Beginning Balance, January 1, 2021Amount Reclassified from Accumulated Other Comprehensive IncomeCurrent Period Other Comprehensive incomeEnding Balance, December 31, 2021Accumulated Other Comprehensive IncomeUnrealized Holding Gains

$

                                                                      Accumulated Other Comprehensive IncomeCurrent Period Other Comprehensive income amount Reclassified from Accumulated Other Comprehensive IncomeEnding Balance, December 31, 2021Beginning Balance, January 1, 2021Unrealized Holding Gains

$

                                                                      Beginning Balance, January 1, 2021Unrealized Holding GainsAccumulated Other Comprehensive IncomeAmount Reclassified from Accumulated Other Comprehensive IncomeEnding Balance, December 31, 2021Current Period Other Comprehensive income

                                                                      Accumulated Other Comprehensive IncomeEnding Balance, December 31, 2021Unrealized Holding GainsAmount Reclassified from Accumulated Other Comprehensive IncomeBeginning Balance, January 1, 2021Current Period Other Comprehensive income

                                                                      Amount Reclassified from Accumulated Other Comprehensive IncomeEnding Balance, December 31, 2021Current Period Other Comprehensive income accumulated Other Comprehensive IncomeBeginning Balance, January 1, 2021Unrealized Holding Gains

$

Answer 1

Requirement 1: Prepare a statement of comprehensive income for 2020 as follows

C Inc
Statement of Comprehensive Income
For the Year Ended December 31, 2020
Particulars		Amount
Net income		$124,000
Other comprehensive income:
Add: Unrealized holding gain		$4,100
Comprehensive income		$128,100

Requirement 2: Prepare a statement of comprehensive income for 2021 as follows

C Inc
Statement of Comprehensive Income
For the Year Ended December 31, 2021
Particulars	Amount	Amount
Net income		$147,000
Other comprehensive income:
Total holding gains in 2021	$43,000
Add: Reclassification adjustment for loss included in net income	$1,500	$44,500
Comprehensive income		$191,500

C Inc
Notes to Financial Statements
Accumulated Other Comprehensive Income:
Particulars	Amount	Amount
Beginning balance, January 1, 2021		$4,100
Other comprehensive income for the current period	$43,000
Add: Amount reclassified from accumulated other comprehensive income	$1,500	$44,500
Ending balance, December 31, 2021		$48,600

Notes:

Particulars	Amount
Net amount received from the sale of Security A	$16,100
Deduct: Cost of Security A	$17,600
Loss on the sale of Security A	($1,500)