CHEGG EXPERTS KEEP PROVIDING THE WRONG ANSWERS. PART 1, 2 and EFFECT

LED Corporation owns $1,950,000 of Branch Pharmaceuticals bonds and classifies its investment as securities available for sale. The market price of Branch's bonds fell by $1,400,000, due to concerns about one of the company's principal drugs. The concerns were justified when the FDA banned the drug. $100,000 of that decline in value already had been included in OCl as a temporary unrealized loss in a prior period. LED views $960.000 of the $1.400.000 loss as related to credit losses, and the other $440,000 as noncredit losses. LED does not plan to sell the investment and does not think it is more likely than not that it will have to sell the investment before fair value recovers What journal entries should LED record to account for the decline in market value in the current period? How should the decline affect net income and comprehensive income? Record the entry for credit losses. Note: Enter debits before credits. Transaction Credit General Journal Loss on investment (unrealized, NI) Credit loss expense Allowance for credit losses Debit 440,000 960.000 1,400,000 Record entry Clear entry View general journal Record the entry for fair value adjustment. Note: Enter debits before credits. Transaction Credit General Journal Fair value adjustment Gain on investments (unrealized. OCI) Debit 100,000 100,000 Record entry Clear entry View general journal net income and comprehensive income? Complete this question by entering your answers in the tabs below. General Journal Effect How should the decline affect net income and comprehensive income Negative amounts should be entered with minus sian) Income statement Other comprehensive income Net effect on comprehensive Income Effect $ 960,000 S 540,000 TS (1,300,000) General Journal General Journal Effect What journal entries should LED record to account for the decline in market value in the current period? (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) No Transaction Credit General Journal Loss on impairment (NI) Credit loss expense Debit 1,400,000 1,400,000 100,000 X Fair value adjustment Gain on investments (unrealized, OCI) 100,000 X Effect > Complete this question by entering your answers in the tabs below. General Journal Effect How should the decline affect net income and comprehensive income? (Negative Effect Income statement Other comprehensive income Net effect on comprehensive income |(1,400,000) * $ 100,000 (1,300,000)