Question

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

Security Cost Fair Value Unrealized Gain (Loss)

A $33,250    $28,500 $(4,750)

B 23,750 26,600 2,850

C 43,700 48,450 4,750

Tota l$100,700 $103,550 2,850

Previous fair value adjustment balance—Dr .760

Fair value adjustment—Dr .$2,090

On January 20, 2021, Concord, Inc. sold security A for $28,690. The sale proceeds are net of brokerage fees.

(a)

  

Prepare the adjusting entry at December 31, 2020, to report the portfolio at fair value. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation Debit Credit

(b)

Show the balance sheet presentation of the investment-related accounts at December 31, 2020. (Do not leave any answer field blank. Enter 0 for amounts.)

CONCORD, INC
Balance Sheet

December 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020

Accumulated other Comprehensive IncomeAccumulated other Comprehensive LossCommon StockCurrent AssetsCurrent LiabilitiesDebt InvestmentsEquity InvestmentsIntangible AssetsLong-term InvestmentsLong-term LiabilitiesAdditional Paid-in CapitalProperty, Plant and EquipmentRetained EarningsStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity

    Accumulated other Comprehensive Income    Accumulated other Comprehensive Loss    Common Stock    Current Assets    Current Liabilities    Debt Investments    Equity Investments    Intangible Assets    Long-term Investments    Long-term Liabilities    Additional Paid-in Capital    Property, Plant and Equipment    Retained Earnings    Stockholders' Equity    Total Assets    Total Current Assets    Total Current Liabilities    Total Intangible Assets    Total Liabilities    Total Liabilities and Stockholders' Equity    Total Long-term Investments    Total Long-term Liabilities    Total Property, Plant and Equipment    Total Stockholders' Equity    

$

Accumulated other Comprehensive IncomeAccumulated other Comprehensive LossCommon StockCurrent AssetsCurrent LiabilitiesDebt InvestmentsEquity InvestmentsIntangible AssetsLong-term InvestmentsLong-term LiabilitiesAdditional Paid-in CapitalProperty, Plant and EquipmentRetained EarningsStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity

    Accumulated other Comprehensive Income    Accumulated other Comprehensive Loss    Common Stock    Current Assets    Current Liabilities    Debt Investments    Equity Investments    Intangible Assets    Long-term Investments    Long-term Liabilities    Additional Paid-in Capital    Property, Plant and Equipment    Retained Earnings    Stockholders' Equity    Total Assets    Total Current Assets    Total Current Liabilities    Total Intangible Assets    Total Liabilities    Total Liabilities and Stockholders' Equity    Total Long-term Investments    Total Long-term Liabilities    Total Property, Plant and Equipment    Total Stockholders' Equity    

    Accumulated other Comprehensive Income    Accumulated other Comprehensive Loss    Common Stock    Current Assets    Current Liabilities    Debt Investments    Equity Investments    Intangible Assets    Long-term Investments    Long-term Liabilities    Additional Paid-in Capital    Property, Plant and Equipment    Retained Earnings    Stockholders' Equity    Total Assets    Total Current Assets    Total Current Liabilities    Total Intangible Assets    Total Liabilities    Total Liabilities and Stockholders' Equity    Total Long-term Investments    Total Long-term Liabilities    Total Property, Plant and Equipment    Total Stockholders' Equity    

    Accumulated other Comprehensive Income    Accumulated other Comprehensive Loss    Common Stock    Current Assets    Current Liabilities    Debt Investments    Equity Investments    Intangible Assets    Long-term Investments    Long-term Liabilities    Additional Paid-in Capital    Property, Plant and Equipment    Retained Earnings    Stockholders' Equity    Total Assets    Total Current Assets    Total Current Liabilities    Total Intangible Assets    Total Liabilities    Total Liabilities and Stockholders' Equity    Total Long-term Investments    Total Long-term Liabilities    Total Property, Plant and Equipment    Total Stockholders' Equity    

AddLess

:

    Accumulated other Comprehensive Income    Accumulated other Comprehensive Loss    Common Stock    Current Assets    Current Liabilities    Debt Investments    Equity Investments    Intangible Assets    Long-term Investments    Long-term Liabilities    Additional Paid-in Capital    Property, Plant and Equipment    Retained Earnings    Stockholders' Equity    Total Assets    Total Current Assets    Total Current Liabilities    Total Intangible Assets    Total Liabilities    Total Liabilities and Stockholders' Equity    Total Long-term Investments    Total Long-term Liabilities    Total Property, Plant and Equipment    Total Stockholders' Equity    

Accumulated other Comprehensive IncomeAccumulated other Comprehensive LossCommon StockCurrent AssetsCurrent LiabilitiesDebt InvestmentsEquity InvestmentsIntangible AssetsLong-term InvestmentsLong-term LiabilitiesAdditional Paid-in CapitalProperty, Plant and EquipmentRetained EarningsStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity

$

Answer 1

Answer:

(a).

Account Titles and Explanation	Debit	Credit
Fair Value Adjustment	2,090
Unrealized Holding Gain or Loss - Equity		2,090
To record adjusting entry to report the portfolio at fair value

(b).

CONCORD, INC
Balance Sheet
31-12-2020
Current Assets
Debt Investments	103,550
Stockholders' Equity
Common Stock	0
Additional Paid-in Capital	0
Retained Earnings	0
Add:
Accumulated other Comprehensive Income	2,850
Total Stockholders' Equity	2,850

Calculation:

a.

To prepare the entry at December 31, 2020, to report the portfolio at fair value, we need to find the Fair value adjustment amount. For that first we need to get the unrealized gain which is the difference of he fair value and the cost of portfolio and then we need to deduct the Previous fair value adjustment balance to get the Fair value adjustment amount. This remaining balance amount need to be adjusted by debiting the Fair Value Adjustment account and crediting it to the Unrealized Holding Gain or Loss - Equity.

Fair value of portfolio	$103,550
Less: Cost of portfolio	($100,700)
Unrealized holding gain	$2,850
Less: Previous fair value adjustment balance	-760
	$2,090

b.

When preparing the partial balance sheet, we need to first report the Debt Investments with the Fair Value amount under the current assets section. Then we need to report the Stockholders' Equity, since there is no amount provided for the Common Stock, APIC, Retained earnings, we need to leave that blank. Then we need to add the Accumulated other Comprehensive Income. The unrealized holding gain before deducting the balance of Previous fair value adjustment need to be reported under Accumulated other Comprehensive Income.