Thunderbird Corporation has excess cash resulting from extremely successful operations. It has decided to invest this cash in debt and equity securities as follows to be held as non-strategic investments:

On December 31, 2020, the fair values of the investments held by Thunderbird Corporation were Rossport $0.90; Temecula, $101.00; and Pacific Exploration, $14.00. Assume the fair value and carrying value of the Miami Boat Inc. bond were equal.

Required

1. Prepare an amortization schedule for 2020 regarding the Miami Boat Inc. bond.

2. Prepare journal entries to record the investment activity, including the fair value adjustment on December 31, 2020.

3. Show how the investments will be reported on the December 31, 2020, balance sheet.

Analysis Component: If the December 31, 2020, fair value adjustment were not recorded by Thunderbird Corporation, what is the impact on the financial statements? Explain.

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2020 Purchased 16,000 common shares of Rossport at $1.40, plus $500 in transaction fees. Jan. 18 Purchased 500 common shares of Temecula at $103.00, plus paid $100 transaction fees. Purchased 1,000 common shares of Pacific Exploration at $18.00, plus an additional $250 in transaction fees. Received a $0.10 per share cash dividend on the Rossport common shares. Feb. 27 Aprг. 26 30 Sold 10,000 Rossport common shares at $1.15, less a transaction fee of $250.00. Paid $142,938 which included $500 in transaction fees, for a 7.2%, four-year, $140,000 Miami Boat Inc. bond that pays interest quarterly beginning September 30. The market rate of interest on this date was 6.7%. Thunderbird Corporation plans to hold this investment until maturity. June 4 July Received a $7.25 per share cash dividend on the Temecula shares. Received a $0.10 per share cash dividend on the remaining Rossport shares. 17 Sept. Sept 30 Received interest on the Miami Boat Inc. bond. Dec. 31 Received interest on the Miami Boat Inc. bond. 2021 Sold the remaining Rossport shares at $0.85, less transaction fee of $150. Feb. 6.