Teal Company has the following investments as of December 31, 2020:

Investments in common stock of Laser Company$1,450,000Investment in debt securities of FourSquare Company$3,200,000

In both investments, the carrying value and the fair value of these two investments are the same at December 31, 2020. Teal's stock investments does not result in significant influence on the operations of Laser Company. Teal's debt investment is considered held-to-maturity. At December 31, 2021, the shares in Laser Company are valued at $1,090,000; the debt investment securities of FourSquare are valued at $2,460,000 and are considered impaired.

A. Prepare the journal entry to record the impairment of the debt securities at December 31, 2021

B. Assuming the fair value of the Laser shares is $1,370,000 and the value of its debt investment is $2,920,000, what entries, if any, should be recorded in 2022?

C. Assume that the debt investment in FourSquare Company was available-for-sale and the expected credit loss was $850,000. Prepare the journal entry to record this impairment on December 31, 2021.

2.On August 15, 2019, Carla Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $792. The notional value of the call option is880shares, and the option price is $88. The option expires on January 31, 2020. The following data are available with respect to the call option.

Date Market Price of Counting Time Value of Call Option

Crows Shares

September 30, 2019 $106per share $396

December 31, 2019 $101per share 143

January 15, 2020 $103per share 66

Prepare the journal entries for Carla for the following dates.

(a)Investment in call option on Counting Crows shares on August 15, 2019.

(b)September 30, 2019Carla prepares financial statements.

(c)December 31, 2019Carla prepares financial statements.

(d)January 15, 2020Carla settles the call option on the Counting Crows shares.

3. Flint Co. purchased a put option on Echo common shares on January 7, 2020, for $378. The put option is for370shares, and the strike price is $86(which equals the price of an Echo share on the purchase date). The option expires on July 31, 2020. The following data are available with respect to the put option.

Date Market Price of Echo Shares Time Value of Put Option

March 31, 2020 $80per share $182

June 30, 2020 82per share 86

July 6, 2020 77 per share 24

Prepare the journal entries for Flint Co. for the following dates.

(a)January 7, 2020Investment in put option on Echo shares.

(b)March 31, 2020Flint prepares financial statements.

(c)June 30, 2020Flint prepares financial statements.

(d)July 6, 2020Flint settles the put option on the Echo shares.