Question

Splish Company has the following investments as of December 31, 2020:

Investments in common stock of Laser Company		$1,540,000
Investment in debt securities of FourSquare Company		$3,590,000

In both investments, the carrying value and the fair value of these two investments are the same at December 31, 2020. Splish’s stock investments does not result in significant influence on the operations of Laser Company. Splish’s debt investment is considered held-to-maturity. At December 31, 2021, the shares in Laser Company are valued at $1,120,000; the debt investment securities of FourSquare are valued at $2,740,000 and are considered impaired.

(a)

Partially correct answer iconYour answer is partially correct.

Prepare the journal entry to record the impairment of the debt securities at December 31, 2021. (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.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2021

Answer 1

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2021	Loss on Investments in Laser Company	420,000		(1,540,000 - 1,120,000)
	Equity Investment in Laser Company		420,000
	(Recorded Impairment loss in Investments in Common stock of Laser Company)
Dec. 31, 2021	Loss on Investments in FourSquare Company	850,000		(3,590,000 - 2,740,000)
	Debt Investments in FourSquare Company		850,000
	(Recorded Impairment loss in Investments in Debt Securities of FourSquare Company)