The investments of Steelers Inc. include a single investment: $400,000 of Bengals Inc. 5% bonds purchased at

Question:

The investments of Steelers Inc. include a single investment: $400,000 of Bengals Inc. 5% bonds purchased at 100 on January 1, 20Y7. These bonds were classified as available-for-sale securities. As of the December 31, 20Y7, balance sheet date, the fair value of the bonds declined to $392,800.

a. Journalize the entries to acquire the investment on January 1, 20Y7, and record the adjustment to fair value on December 31, 20Y7.

b. How is the unrealized gain or loss for available-for-sale investments disclosed on the financial statements?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...