Use the following facts to answers questions 35 - 37:

Intermediate Accounting Investors (IAI) purchased equity securities in 2023. IAI does not have significant influence over the investees. Info on purchase price is below:

Security Purchase Date Purchase Price Fair Value 12/31/2023 Fair Value 12/31/2024

A 1/1/2023 600,000 460,000 590,000

B 2/1/2023 150,000 165,000 170,000

35. How should IAI report the value of Security A and B on its financial statements?

At historical cost

At fair value with unrealized gain and losses in net income

Using the Equity Method

At fair value with unrealized gains and losses in OCI

36. What journal entry should IAI make relative to the carrying value of Security A and B at 12/31/2023?

Unrealized Loss - OCI 125,000

Fair Value Adjustment - Equity Investments 125,000

Unrealized Loss - Net Income 125,000

Fair Value Adjustment - Equity Investments 125,000

Fair Value Adjustments 125,000

Investments in Equity Securities 125,000

No entry, IAI carries the investments at historical cost.

37. What journal entry should IAI make relative to the carrying value of Security A and B at 12/31/2024?

Fair Value Adjustment - Equity Investments 135,000

Unrealized Gain - Net Income 135,000

Fair Value Adjustment - Equity Investments 115,000

Unrealized Gain - Net Income 115,000

Fair Value Adjustment - Equity Investments 115,000

Unrealized Gain - OCI 115,000

No entry is needed IAI carries the Security Investments at historical cost