QS 15-9 Recording fair value adjustment for securities LO P3 During the current

Question

QS 15-9 Recording fair value adjustment for securities LO P3

During the current year, Reed Consulting Group acquired long-term available-for-sale securities at a $78,000 cost. At its December 31 year-end, these securities had a fair value of $65,200. This is the first and only time the company purchased such securities.

Prepare the necessary year-end adjusting entry related to these securities. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
  

Explanation / Answer

31-Dec Unrealized loss—Equity 12800 =78000-65200         Fair value adjustment—Available­for­sale (LT) 12800

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