Allowance for Credit Loss

Cash

Credit Loss

Discount on Bond

Dividend receivable

Dividend revenue

Equity in earnings of XYZ

Fair Value Adjustment

Interest Revenue

Investment in Bond

Investment in XYZ common stock

Loss on Impairment (NI)

Premium on Bond

Realized Gain on Sale of Bond

Realized Gain on Sale of Stock

Realized Loss on Sale of Bond

Reclassification adjustment - OCI

Unrealized Holding Gain - NI

Unrealized Holding Gain - OCI

Unrealized Holding Loss - NI

Unrealized Holding Loss - OCI

Problem 20 [significant influence with differential] On January 1, 2020 ABC purchased 100.000 shares of XY Z common shares at purchase price of $13 per share. The ownership of 100,000 shares gives ABC a 20% ownership stake in XYZ, which is sufficient to give ABC significant influence over the operations of XYZ. The fiscal year of ABC ends on December 31. On January 1, 2020, the market value and carrying value were the same for all items on XYZ's balance sheet except for a warehouse, for which the fair value exceededmarket value by $80.000. The warehouse has a ten-year remaining useful life. XYZ's GAAP financials reported total net income of $1.500.000 for calendar year 2020. During that year, XY Z declared and paid of $0.50/share on June 30 and December 31st. ABC received the December 31 dividend payment on January 1, 2021. XYZ common stock, which is traded on the New York Stock Exchange, closed at $17 per share on December 31, 2020. A11 questions below pertain to the accounting for the investment by ABC. 1. Prepare all journal entries related to the equity investment that is necessary for ABC to issue GAAP compliant financial statements for the year ended December 31, 2020. Enter your answer below. Choose the account from the drop-down list in the yellow cell. Enter the amou Entry to record purchase of stock on 1/1/2020: Account Debit Credit 1 1 Entry to record receipt of dividend on 6/30/2020 (assume the dividend payment was received on 6/30) Account Debit Credit 2 2 Entries needed at 12/31/2020: Account Debit Credit 3 3 3 3 2. What will be the post-adjustment December 31, 2020 balance in the Investment in Stock account? Enter your answer in the green box 4 3. What will be the post-adjustment December 31, 2020 balance (if any) in the Fair Value Adjustment account? Enter your answer in the green box 5 4. What amount of dividend revenue (if any) will be reported on the 2020 income statement? Enter your answer in the green box 6 5. What amount of equity in earnings of XYZ (if arty) will be reported on the 2020 income statem ent? Enter your answer in the green box 7 6. At what amount will the investment in XYZ common stock be reported in the asset section of the December 31, 2020 balance sheet? Enter your answer in the green box 8