Bloom Corporation purchased $1,700,000 of Taylor Company 6% bonds at par and classifies their investment as AFS. Unfortunately, a combination of problems at Taylor Company and in the debt market caused the fair value of the Taylor investment to decline to $1,020,000 during 2018. Consider each of the following as independent situation. Assume that Bloom Corporation used the AFS Credit Loss Model introduced in ASU 2016 -13 and required after 2020. 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 $680,000 decline in fair value, Bloom attributes $390,000 to credit losses, and $290,000 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 $680,000 decline in fair value, Bloom attributes $390,000 to credit losses, and $290,000 to noncredit losses. Bloom had recorded a temporary unrealized loss (not an OTT impairment) of $254,000 on the Taylor investment. Required: 1. Prepare appropriate entry(s) at December 31, 2018, and for each year indicate how the scenario will affect net income, OCI, and comprehensive income. 2. Prepare appropriate entry(s) at December 31, 2018. Assume that, Bloom Corporation used the AFS Credit Loss Model introduced in ASU 2016-13 and required after 2020.

Required 1 GJ Required 1 Inc Required 2 Stmt Prepare appropriate entry(s) at December 31, 2018. (If no entry is required for a transaction/event, select "No journal e the first account field.) View transaction list View journal entry worksheet Event Credit Debit 680,000 1. General Journal Other-than-temporary impairment lossNI Discount on bond investment 01 680,000 2a No journal entry required 3 2b 290,000 Other-than-temporary impairment lossOCI Discount on bond investment 290,000 Required 1 GJ Required 1 Inc Stmt > Required 1 GJ d a Required 1 Inc Stmt Required 2 Indicate how the scenario will affect the 2018 income statement, OCI, and comprehensive should be indicated with a minus sign.). Scenario 1 Effect | $ (680,000) Scenario 2 Effect Income statement Other Comprehensive Income Net effect on comprehensive income. $ (290,000) Prepare appropriate entry(s) at December 31, 2018. Assume that, Bloom Corporation used the AFS Credit Loss Model introduced in ASU 2016-13 and required after 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Show less View transaction list 1 Record the impairment effect on the 2018 income statement if the Taylor bonds are sold. ylor 2 Record the entry to adjust the fair value adjustment account to the correct balance. 3 Record the credit losses if the Taylor bonds are not sold. Credit 4 Record the noncredit losses if the Taylor bonds are not sold. 5 Record the entry to adjust the fair value adjustment account to the correct balance. Note : = journal entry has been entered Record entry Clear entry View general journal