90.2K

Verified Solution

Link Copied!

17.1

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

		Investment in common stock of Piedmont Company $ 813,000
		Investment in debt securities of Touchdown Company $ 1,265,000

The carrying value and the fair value of these two investments are the same at December 31, 2020. Stellars stock investment does not result in significant influence on the operations of Piedmont Company. Stellars debt investment is considered held-to-maturity. At December 31, 2021, the shares in Piedmont Company are valued at $ 529,000; the debt investment securities of Touchdown are valued at $ 812,000. Assume that these investments are considered impaired.

Partially correct answer icon

Your answer is partially correct.

Prepare the journal entries to record the impairment of these two securities at December 31, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title to record the impairment of investment in common stock	enter a debit amount	enter a credit amount
enter an account title to record the impairment of investment in common stock	enter a debit amount	enter a credit amount
(To record impairment of investment in common stock)
enter an account title to record the impairment of investment in debt securities	enter a debit amount	enter a credit amount
enter an account title to record the impairment of investment in debt securities	enter a debit amount	enter a credit amount
(To record impairment of investment in debt securities)

eTextbook and Media

List of Accounts

Correct answer icon

Your answer is correct.

Assuming that at December 31, 2022, the fair value of the Piedmont shares is $ 651,000 and the value of its debt investment is $ 1,195,000, what entries, if any, should be recorded in 2022 related to impairment? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

New attempt is in progress. Some of the new entries may impact the last attempt grading.

Your answer is partially correct.

Assume that the debt investment in Touchdown Company was available-for-sale, its fair value was $ 900,000, and the expected credit loss was $ 410,000 at December 31, 2021. Prepare the journal entry to record this impairment on December 31, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount

Answer & Explanation Solved by verified expert

See Answer