Question
Bosch Corporation has government bonds classified as held-for-collection at December 31, 2021. These bonds have a par value of 600,000, an amortized cost of 600,000,
Bosch Corporation has government bonds classified as held-for-collection at December 31,
2021. These bonds have a par value of 600,000, an amortized cost of 600,000, and a fair value of 555,000. In evaluating the bonds, Bosch determines the bonds have a 45,000 permanent decline in value. That is, the company believes that impairment accounting is now appropriate for these bonds.
Instructions
(a) Prepare the journal entry to recognize the impairment.
(b) What is the new cost basis of the bonds?
(c) At December 31, 2022, the fair value of the municipal bonds is 570,000. Prepare the entry (if any) to record this information.
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
