Question
Exercise E 12-26 Fair Value Option Colah Company purchased $2.7 million of Jackson. INC. 5% bonds at par on July 1, 2018, with interest paid
Exercise E 12-26 Fair Value Option
Colah Company purchased $2.7 million of Jackson. INC. 5% bonds at par on July 1, 2018, with interest paid semi-annually. when the bonds were aquired Colah decided to elect fair value option for accounting for its investment. At December 31, 2018, the jackson bond as a fair value of $3, 070,000. Colah sold the Jackson bonds on July 1, 2019 for $2,430,000.
Required:
1. Prepare Colah's journal entries to record:
a. The purchase of Jackson bonds on July 1
b. Interest revenue for the last half of 2018
c. Any year-end 2018 adjusting entries
d. Interest revenue for the first half of 2019
e. Record the entry to adjust to fair vale at the date of the sale
f. any entry or entries necessary upon the sale of the Jackson bonds on July 1, 2019
2. Fill out the following table to show the effect of the Jackson bonds on Colah's net income, other comprehensive income, and comprehensive income for 2018, 2019, and cumulatively over 2018 and 2019
2018 2019 Total
Net Income
OCI
Compehensive Income
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