A$.$ Sunland Corporation has an investment in corporate bonds classified as available$-$for$-$sale at December $31,2025.$ These bonds have a par value of $$467,000,$ an amortized cost of $$467,000,$ and a fair value of $$389,000.$ The company believes that impairment accounting is now appropriate for these bonds because the expected credit loss on the bonds is $$93,000.//$

B$.$ What is the new cost basis of the corporate bonds? $//$

New Cost basis of the municipal bonds: $$389,000$

Given that the maturity value of the bonds is $$467,000,$ should Sunland Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

No $//$

C$.$ At December $31,2026,$ the fair value of the bonds is $$418,000.$ Prepare the entry $($if any$)$ to record this information assuming the expected credit loss is expected to be $$69,600$ at this time.$($a$)$

Correct Answer $($Used$)$

Prepare the journal entry to recognize the impairment. $($Credit account titles are outomatically indented when the amount is entered.

Do not indent manuallk: If no entry is required, select $"$No Entry" for the account titles and enter Ofor the amounts. List debit entry before

eredit entry$)$

Account Titles and Explanation

Debit

Credit

Bad Debt Exptrse

Alowance for Doubted Accountas

$($b$)$

Correct Anower

Your answer is correct.

What is the new cost basis of the corporate bonds?

New cost basis of the municipal bonds

Given that the maturity value of the bonds is $$467,000,$ should Surland Corporation amortize the difference between the

carrying amount and the maturity value over the life of the bonds?

$($c$)$

X Your answer is incorrect.

At December $31.2026,$ the fair value of the bonds is $$418000.$ Prepare the entry $($if any$)$ to record this information assuming the

expected credit loss is expected to be $$69,600$ at this time. $($Credit account tities ore automotically indented when the amount is

entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles ond enter O for the amounts. List debit entry

before credit entry$)$

Account Titles and Explanation

Debit

Credit

Unrealzed Holling Galn or Lost$-$Equlty

Fale value Adyutment