Bloom Corporation purchased $1,900,000 of Taylor Company 5% bonds, at their face amount, with the intent and ability to hold the bonds until they matured in 2025, so Bloom classifies its investment as AFS. 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 $1,320,000 during 2021.

1. 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 $580,000 decline in fair value, Bloom attributes $340,000 to credit losses, and $240,000 to noncredit losses.
2. 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 $580,000 decline in fair value, Bloom attributes $340,000 to credit losses, and $240,000 to noncredit losses.

Required: 1. Prepare appropriate entry(s) at December 31, 2021 and indicate how the scenario will affect the 2021 income statement, OCI, and comprehensive income. 2. Prepare appropriate entry(s) at December 31, 2021. Assume that, at the end of 2020, Bloom had recorded an unrealized loss of $145,000 on the Taylor investment.

Required 1 GERequired 1 Inc Required 1 G Stmt Required 2 Prepare appropriate entry(s) at December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet General Journal Credit No Event A01 Debit 580,000 Loss on impairment (NI) Discount on bond investment 580,000 340,000 Credit loss expense Allowance for credit losses 340,000 2h 240,000 Loss on investments (unrealized, OCI) Fair value adjustment 240,000 Required 1 6 Required 1 Inc Stmt > Complete this question by entering your answers in the tabs below. Required 1 G) Required 1 Inc Stmt Required 2 Prepare appropriate entry(s) at December 31, 2021. Assume that, at the end of 2020, Bloom had recorded an unrealized loss of $145,000 on the Taylor investment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Event Credit General Journal Loss on impairment (NI) Discount on bond investment Debit 580,000 1a 580,000 B 16 Fair value adjustment account field.) View transaction list View journal entry worksheet Credit Debit 580,000 580,000 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 $580,000 decline in fair value, Bloom attributes $340,000 to credit losses, and $240,000 to noncredit losses. Record the impairment effect on the 2021 income statement if the Taylor bonds are sold. Required 2 > 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 $580,000 decline in fair value, Bloom attributes $340,000 to credit losses, and $240,000 to noncredit losses. Record the entry to reclassify the unrealized loss recorded in the year 2020. Note : = journal entry has been entered Complete this question by entering your answers in the tabs below. Required 1 g) Required 1 Ind Required 2 Stmt Indicate how the scenario will affect the 2021 income statement, oci, and comprehensive income. (Amounts to be deducted should be indicated with a minus sign.) Scenario 1 Effect $ (580,000) Scenario 2 Effect Income statement Other Comprehensive Income Net effect on comprehensive income. Required 1 GERequired 1 Inc Required 1 G Stmt Required 2 Prepare appropriate entry(s) at December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet General Journal Credit No Event A01 Debit 580,000 Loss on impairment (NI) Discount on bond investment 580,000 340,000 Credit loss expense Allowance for credit losses 340,000 2h 240,000 Loss on investments (unrealized, OCI) Fair value adjustment 240,000 Required 1 6 Required 1 Inc Stmt > Complete this question by entering your answers in the tabs below. Required 1 G) Required 1 Inc Stmt Required 2 Prepare appropriate entry(s) at December 31, 2021. Assume that, at the end of 2020, Bloom had recorded an unrealized loss of $145,000 on the Taylor investment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Event Credit General Journal Loss on impairment (NI) Discount on bond investment Debit 580,000 1a 580,000 B 16 Fair value adjustment account field.) View transaction list View journal entry worksheet Credit Debit 580,000 580,000 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 $580,000 decline in fair value, Bloom attributes $340,000 to credit losses, and $240,000 to noncredit losses. Record the impairment effect on the 2021 income statement if the Taylor bonds are sold. Required 2 > 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 $580,000 decline in fair value, Bloom attributes $340,000 to credit losses, and $240,000 to noncredit losses. Record the entry to reclassify the unrealized loss recorded in the year 2020. Note : = journal entry has been entered Complete this question by entering your answers in the tabs below. Required 1 g) Required 1 Ind Required 2 Stmt Indicate how the scenario will affect the 2021 income statement, oci, and comprehensive income. (Amounts to be deducted should be indicated with a minus sign.) Scenario 1 Effect $ (580,000) Scenario 2 Effect Income statement Other Comprehensive Income Net effect on comprehensive income.