Question

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

Security		Cost		Fair Value		Unrealized Gain (Loss)
A		$17,100		$14,200		$(2,900)
B		11,800		15,300		3,500
C		22,000		25,600		3,600
Total		$50,900		$55,100		4,200
Previous fair value adjustment balance—Dr.						300
Fair value adjustment—Dr.						$3,900

On January 20, 2021, Ivanhoe, Inc. sold security A for $14,300. The sale proceeds are net of brokerage fees.

Ivanhoe, Inc. reports net income in 2020 of $117,000 and in 2021 of $141,000. Total holding gains (including any realized holding gain or loss) equal $42,000 in 2021.

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

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

Answer 1

Solution:

Requirement A: Statement of comprehensive income for 2020

Ivanhoe, Inc.
Statement of Comprehensive Income
For the Year Ended December 31, 2020
Net Income(A)		$        117,000
Other Comprehensive Income
Unrealized holding gain(B)		$            3,900
Comprehensive Income(A+B)		$        120,900

Requirement B: Statement of comprehensive income for 2021

Ivanhoe, Inc.
Statement of Comprehensive Income
For the Year Ended December 31, 2021
Net Income(A)		$        141,000
Other Comprehensive Income
Holding gain	$           42,000
Add: Reclassification adjustment for loss included
in net income($17,100 - $14,300)	$             2,800	$          44,800
Comprehensive Income		$        185,800
Accumulated other comprehensive income:
Beginning balance, January 1,2021(A)		$            3,900
Current period other comprehensive income	$           42,000
Amount reclassified from accumulated
Other comprehensive income	$             2,800
Unrealized holding gain(B)(42000+2800)		$          44,800
Ending balance, December 31, 2021(A+B)		$          48,700