Awesome Accounting Students (AAS) Incorporated disclosed the following information in Footnote 9 of their most recent annual report.

	December 31, 2020
$ in millions	Adjusted Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
Corporate debt investments	$4,500	$15	$16	$4,499
Investment in Governmental Debt	2,010		24	1,986
Financial institution Instruments	3,200	980	230	3,950
Total AFS Investments	$9,710	$995	$270	$10,435

	December 31, 2019
$ in millions	Adjusted Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
Corporate debt investments	$4,800	$3	$10	$4,793
Investment in Governmental Debt	5,450		60	5,390
Financial institution Instruments	4,650	1,026	125	5,551
Total AFS Investments	$14,900	$1,029	$195	$15,734

AAS indicates the following: During 2020, we sold available-for-sale investments. . . The gross realized gains on sales of available-for-sale investments were $970 million in 2020. AASs Note 17 (Other Comprehensive Income) indicates unrealized holding gains of $855 million during 2020, and a reclassification adjustment of $970 for gains that had previously been included in OCI and recorded in the fair value adjustment but which were now being included in net income after being realized upon sale.

Required: 1. Prepare a T-account that shows the change between the December 31, 2019, and December 31, 2020, balances for the fair value adjustment associated with AASs AFS Investments. Also, indicate how much did the fair value adjustment change during 2020?

2. Prepare a journal entry that records any unrealized holding gains and losses that occurred during 2020. Ignore income taxes.

3. Prepare a journal entry that records any reclassification adjustment for available-for-sale investments sold during 2020. Ignore income taxes.

4. Using your journal entries from requirements 2 and 3, adjust your T-account from requirement 1. Have you accounted for the entire change in the fair value adjustment that occurred during 2020? If not, what is one possible explanation?

Awesome Accounting Students (AAS) Incorporated disclosed the following information in Footnote 9 of their most recent annual report. December 31, 2020 $ in millions Adjusted Cost Gross Gross Fair Value Unrealized Unrealized Galns Losses Corporate debt $4,500 $15 $16 $4,499 Investments Investment in 2,010 24 1,988 Governmental Debt Financial 3,200 980 230 3,950 Institution Instruments Total AFS $9,710 $995 $270 $10,435 Investments Fair Value S in millions Adjusted Cost December 31, 2019 Gross Gross Unrealized Unrealized Gains Losses $3 $10 $4,793 60 5,390 125 5,551 Corporate debt $4,800 Investments Investment in 5,450 Governmental Debt Financial 4,650 Institution Instruments Total AFS $14,900 Investments 1,026 $195 $15,734 $1,029 AAS indicates the following: "During 2020, we sold available-for-sale investments... The gross realized gains on sales of available-for-sale investments were $970 million in 2020. AAS's Note 17 (Other Comprehensive Income) indicates unrealized holding gains of $855 million during 2020, and a reclassification adjustment of $970 for gains that had previously been included in OCI and recorded in the fair value adjustment but which were now being included in net income after being realized upon sale. 20 ASI L. 32000 Pru during 2000 ron incon aume anyway nator ung 4 Using your own Hey change 2007 Awesome Accounting Students (AAS) Incorporated disclosed the following information in Footnote 9 of their most recent annual report. December 31, 2020 $ in millions Adjusted Cost Gross Gross Fair Value Unrealized Unrealized Galns Losses Corporate debt $4,500 $15 $16 $4,499 Investments Investment in 2,010 24 1,988 Governmental Debt Financial 3,200 980 230 3,950 Institution Instruments Total AFS $9,710 $995 $270 $10,435 Investments Fair Value S in millions Adjusted Cost December 31, 2019 Gross Gross Unrealized Unrealized Gains Losses $3 $10 $4,793 60 5,390 125 5,551 Corporate debt $4,800 Investments Investment in 5,450 Governmental Debt Financial 4,650 Institution Instruments Total AFS $14,900 Investments 1,026 $195 $15,734 $1,029 AAS indicates the following: "During 2020, we sold available-for-sale investments... The gross realized gains on sales of available-for-sale investments were $970 million in 2020. AAS's Note 17 (Other Comprehensive Income) indicates unrealized holding gains of $855 million during 2020, and a reclassification adjustment of $970 for gains that had previously been included in OCI and recorded in the fair value adjustment but which were now being included in net income after being realized upon sale. 20 ASI L. 32000 Pru during 2000 ron incon aume anyway nator ung 4 Using your own Hey change 2007