LED Corporation owns $1,050,000 of Branch Pharmaceuticals bonds and classifies its investment as securities available-for-sale. The market price of Branch's bonds fell by $500,000, 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 OCI as a temporary unrealized loss in a prior period. LED views $240,000 of the $500,000 loss as related to credit losses, and the other $260,000 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? Complete this question by entering your answers in the tabs below. 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.) View transaction list Journal entry worksheet Record the entry for credit losses. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal LED Corporation owns $1,050,000 of Branch Pharmaceuticals bonds and classifies its investment as securities available-for-sale. The market price of Branch's bonds fell by $500,000, 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 $240,000 of the $500,000 loss as related to credit losses, and the other $260,000 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? Complete this question by entering your answers in the tabs below. 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.) View transaction list Journal entry worksheet
