Question
The High Voltage Electrical Contractor Corporation has an investment in bonds classified as available for sale securities at December 31, 2019. The bonds have a
The High Voltage Electrical Contractor Corporation has an investment in bonds classified as available for sale securities at December 31, 2019. The bonds have a par value of $900,000, and an amortized cost of $900,000. The fair value on December 31, 2019 is $810,000. The company had previously recorded an adjusting entry for the unrealized holding loss of $90,000. However, as of December 31, 2019 they have determined that the loss is no longer temporary, and feel impairment accounting is appropriate. Note: this is the only investment the company holds.
Required
a. Prepare the necessary journal entries at December 31, 2019 based on the above information.
b. Prepare any journal entries necessary assuming that the bonds fair value increased to $830,000 at December 31, 2020
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