Question

If a company chooses the fair value option to account for long-term debt, a decrease in the fair value of the liability due to a decline in the company's creditworthiness is recorded by crediting

		Unrealized Holding Gain or Loss - Income
		Bonds Payable
		Realized Holding Gain
		Unrealized Holding Gain or Loss - Equity (Other Comprehensive Income)

Answer 1

  Generally fair value on are non current liabilities , some of the list of fair value are under:

a)    bond ,

b)    notes payable or

c)    unreleased holding gain or loss as a part of income or loss of the organization depending on circumstances.

d)    unreleased gain or loss in the fair value of the liabilities from one period to another company has reported.

e)    Notes payable

Following is the entry fair value option to account for long-term debt, a decrease in the fair value of the liability due to a decline in the company's creditworthiness is recorded complete jv as under:

Bond payable                                Dr.

        To Unreleased Holding gain or loss – Income   Cr.

( Being amount of $ ……   decrease fair value of the liabilities accounted for)