Case 10-5 Accounting for an Available-For-Sale Debt Securities

Bentley Company acquires Joslyn Company debt securities on January 1, 2020 for $15.000. Upon acquisition, Bentley Company designates the securities as available for sale. Bentley Company sells the Joslyn Company debt securities for $20,000 on February 1, 2021.

The following table summarizes the fair value of the Joslyn Company debt securities over the holding period.

Date Fair value

1/1/2020 $15,000

12/31/2020 18,000

2/1/2021 20,000

Required:

How should Bentley Company record the:

A. Acquisition of the debt securities

B. Subsequent changes in fair value of the debt securities

C. Disposition of the debt securities?