Question

2 Part 2 Homework i Seved Bloom Corporation purchased $1,000,000 of Taylor Company 5% bonds at their face amount, with the intent and ability to hold the bonds until they matured in 2025, so Bloom classifies its investment as HTM. Unfortunately, a combination of problems at Taylor Company and in the debt securities market caused the fair value of the Taylor investment to decline to $600,000 during 2021 The following are the two alternative scenarios that should be analyzed independent of each other 1 Bloom now believes it is more likely than not that it will have to sell the Taylor bonds before the bonds have a chance to recover their fair value of the $400,000 decline in fair value, Bloom attributes $250,000 to credit losses, and $150,000 to non credit losses 2 Bloom does not plan to sell the Taylor bonds prior to maturity, and does not believe it is more likely than not that it will have to sell the Taylor bonds before the bonds have a chance to recover their fair value of the $400,000 decline in fair value. Bloom attributes $250,000 to credit losses, and $150,000 to noncredit losses Required: Prepare appropriate entry's) at December 31, 2021, and indicate how the scenario will affect the 2021 income statement ignoring income taxes). Complete this question by entering your answers in the tabs below. General Journal income Statement Prepare appropriate entry(s) at December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet < Prey 6 of 7 Next >

Answer 1

credit Answer: 02. Journal entry Date particulars LF 2011 other than Temporary impairmentloss to Dec-31 h To Discount on bonds investment Being Impairment loss of investment) Debit $400,000 $400,000 Income stalement particulars other than Temporary impairment loss | Amount ($400,000)