tea saemdsmantn Hele I Question 7 Presented below is information related to the

Question

tea saemdsmantn Hele I Question 7 Presented below is information related to the purchases of common stock by Bonita Company during 2017 cost (at se date) $92,000 265,000 178,000 (at December 31) in Lee C 312,000 189,000 Investment in Woods Inc. stock Total (Assume a zero balance for any Fair Value Adjustment account.) (a) What entry would Bonita make at December 31, 2017, to record the investment in Arroyo Company stock if it chooses to report this security using the fair value opelen? (b) What entry would Bonita make at December 31, 2017, to record the investments in the Lee and Woods corporations, assuming that Bonita did not select the fair value option for these investments? (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 aod enter 0 for the amounts.) Credit 9oen sh Click if you would like to Show Work for this question:

Explanation / Answer

FAIR VALUE METHOD (a) Account Debit Credit Unrealized gain or loss-Equity $1,800 (92000-74000) 18000 Fair value adjustment $1,800 EQUITY METHOD (b) If fair value option is not selected, no journalentry is required for periodic change in market value The entry is required when there is reported income or loss of Lee and Woods Corporation The entry is required when   Lee and Woods Corporation pays dividend

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