Adjusting AFS Debt Securities to Fair Value A portfolio of investments of available-for-sale securities held by Dow Inc. is as follows. Dece. 31, Year 1 Eastern Corp. bonds Western Corp. bonds Total Cost Fair Value $72,000 $76,800 120,000 123,000 $192,000 $199,800 Dece. 31, Year 2 Eastern Corp. bonds Cost $72,000 Fair Value $84,000 Western Corp. bonds 120,000 Total $192,000 $198,000 114,000 The Fair Value Adjustment account had a $0 balance on January 1 of Year 1. No sales or purchases took place in the available-for-sale investment portfolio in Year 1 and Year 2. a. Record the adjusting entry on December 31 of Year 1 to adjust the debt investments to fair value. b. Record the adjusting entry on December 31 of Year 2 to adjust the debt investments to fair value. Date Account Name a. Dec. 31, Year 1 To record adjusting entry. b. Dec. 31, Year 2 Dr. Cr. 0 0 0 0 0 0 0 0 To record adjusting entry c. Indicate how the adjustment to fair value in (b) would be reported in Dow's income statement for the year ended December 31 of Year 2. Note: Indicate a loss with a negative sign. Income statement Year 2 Net gain (loss) on investment $ 0