Elaina Company has the following investment as of December 31, 2019:

Dec. 31

Expected Cash Flows

2020

35,000

2021

35,000

2022

385,000

Total cash flows

455,000

Investment in debt securities of FourSquare Company

$3,300,000

The carrying value and the fair value of the investment is the same at December 31, 2019. Elaina's debt investment is considered held-for-collection. At December 31, 2020, the debt investment securities of FourSquare are valued at $2,500,000. Assume that these investments are considered impaired.

Instructions

a. Prepare the journal entries to record the impairment of these securities at December 31, 2020.

b. Assuming the fair value of its debt investment is $2,950,000, what entries, if any, should be recorded in 2021 related to impairment?

c. Prepare the journal entries at December 31, 2021, assuming these securities are not impaired. (Ignore interest revenue entries.)

d. Assume that the debt investment in FourSquare Company was held-for- collection and selling and the expected credit loss was $250,000. Prepare the journal entry to record this impairment on December 31, 2020.