The Coca-Cola Company's December 31, 2010 balance sheet reports investments in available-for-sale securities at $485 million, with gross unrealized gains of $267 million and gross unrealized losses of $5 million. Coca-Cola's 2010 statement of shareholders' equity reports a net change in unrealized gains on available-for-sale securities as a $102 million credit to accumulate other comprehensive income. Coca-Cola also recorded other-than-temporary impairment losses of $26 million in 2010, on AFS securities with a carrying value of $131 million prior to the impairment charge. Coca-Cola did not sell any AFS securities in 2010.
Required
a. Assume the impaired AFS securities originally cost $150 million. Prepare the entry Coca-Cola made in 2010 to record the impairment loss on AFS securities.
b. Given the entry you made in a., prepare the adjusting entry made at the end of 2010 to record the unrealized gain or loss on AFS securities.
c. Assume that in 2011 Coca-Cola sells AFS securities carried at $50 million on December 31, 2010, for $55 million. The original cost of these securities was $44 million. Prepare the journal entry to record the sale of the securities.