Farms inc. owns 4% of common shares of XYZ. co. at the beginning of the current...

Farms inc. owns 4% of common shares of XYZ. co. at the beginning of the current year the fair value of an investment in XYZ was $250,000. At the end of the year, the fair value had decreased to $245,000.

What journal entry would Farms inc. record to adjust the investment of the fair value?

Expert Solution

Notes: 1	Calculation of Gain or Loss on Investment
	Market Value at the year End	$ 2,45,000
	Less: Investment value	$ 2,50,000
	Unrealized Loss on investment	$ -5,000


Solution:
	Journal entry of the same is passed as below,

Date	Account Title and explanation	Debit	Credit

-----	Unrealized Loss on investment	$ 5,000
	Investment		$ 5,000

ekkarill92 answered 2 years ago

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