Assume all of the same facts and scenarios as E 12–30, except that Bloom Corporation classifies its Taylor investment as AFS.

Required:
1. For each of the scenarios shown in E 12–30, prepare the appropriate entry(s) at December 31, 2021. Indicate how the scenario will affect the 2021 income statement, OCI, and comprehensive income.
2. Repeat requirement 1, but now assume that, at the end of 2020, Bloom had recorded an unrealized loss of $100,000 on the Taylor investment.

E 12–30

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.