Bloom Corporation purchased $$1,100,000$ of Taylor Company $5\%$ bonds, at their face amount, with the intent and ability to hold the Complete this question by entering your answers in the tabs below.

General

Income

Journal

Statement

Prepare appropriate entry$($s$)$ at December $31,2024.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

Indicate how the scenario will affect the $2024$ income statement $($Ignoring income taxes$).$

Note: Amounts to be deducted should be indicated with a minus sign.

bonds until they matured in $2028,$ so Bloom classifies its investment as HTM$.$ Unfortunately, a combination of problems at Taylor

Company and in the debt securities market caused the fair value of the Taylor investment to decline to $$680,000$ during $2024.$ The

following are the two alternative scenarios that should be analyzed independent of each other.

Bloom now believes it is more likely than not that it will have to sell the Taylor bonds before the bonds have a chance to recover

their fair value. Of the $$420,000$ decline in fair value, Bloom attributes $$260,000$ to credit losses, and $$160,000$ to noncredit

losses.

Bloom does not plan to sell the Taylor bonds prior to maturity, and does not believe it is more likely than not that it will have to

sell the Taylor bonds before the bonds have a chance to recover their fair value. Of the $$420,000$ decline in fair value, Bloom

attributes $$260,000$ to credit losses, and $$160,000$ to noncredit losses.

Required:

Prepare appropriate entry$($s$)$ at December $31,2024,$ and indicate how the scenario will affect the $2024$ income statement $($ignoring

income taxes$).$