Question
Ayayai Ltd. has a single investment that it accounts for using FV-OCI. The carrying value of the investment at the last reporting period was $60,900.
Ayayai Ltd. has a single investment that it accounts for using FV-OCI. The carrying value of the investment at the last reporting period was $60,900. To date, $2,500 of unrealized gains on fair value adiustments have been recorded to other comprehensive income. The original cost of the investment is therefore $58,400. On June 15, when the market value of the investment was $61,320, Ayayai sold the investment. Using the three-step approach, record the sale and reclassification (recycling) entry at June 15, assuming the investment is an equity investment and the company reclassifies gains or losses to Retained Earnings on disposition of the investment.
Pass journal entry to:
- TO ADJUST TO FAIR VALUE
- TO RECORD DISPOSAL
- TO RECLASSIFY GAIN
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