Question

Exercise 17-9 (Part Level Submission) At December 31, 2017, the available-for-sale debt portfolio for Skysong, Inc. is as follows. Security Cost Fair Value Unrealized Gain (Loss) A $31,500 $27,000 $(4,500 ) B 22,500 25,200 2,700 C 41,400 45,900 4,500 Total $95,400 $98,100 2,700 Previous fair value adjustment balance—Dr. 720 Fair value adjustment—Dr. $1,980 On January 20, 2018, Skysong, Inc. sold security A for $27,180. The sale proceeds are net of brokerage fees. Collapse question part (a) Correct answer. Your answer is correct. Prepare the adjusting entry at December 31, 2017, 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 Entry field with correct answer Fair Value Adjustment Entry field with correct answer 1980 Entry field with correct answer Entry field with correct answer Unrealized Holding Gain or Loss - Equity Entry field with correct answer Entry field with correct answer 1980 Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT Attempts: 1 of 3 used Collapse question part (b) Show the balance sheet presentation of the investment-related accounts at December 31, 2017. (Do not leave any answer field blank. Enter 0 for amounts.) SKYSONG, INC Balance Sheet $ 98100 : $ Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS LINK TO TEXT

Answer 1

Credit part a: Date Accounts title 31-Dec-17 Fair value adjustment-AFS debt investment Unrealized holding gain/loss-equity [To record the fair value adjustment] Debit $ 1,980 S 1,980 The portfolio should be reported at the fair value of $98,100 Since the cost of the portfolio is $95,400, the unrealized holding gain is $2,700, of which $720 is already recognized The ramining balance should be adjusted in year 2017 part b: Amount Skysong, Inc Partial balance sheet Current assets: Available fo sale (AFS) securities $ 98,100 Stockholders equity: Common stock Paid in capital in excess ofpar-common stock Retained earnigs Accumulated other comprehensive income-unrealized holding G/L $ 1,980 Total stockholders equity XXXX NOTES: The unrealized holding gain of $2,700 (including the previous balance of $720) should be reported as an addition to stockholders' equity and Fair Value Adjustment (AFS) account balance of $1,980 should be added to the cost of the securities account.