Exercise 17-22 (Part Level Submission) Stellar Company has the following investm

Question

Exercise 17-22 (Part Level Submission) Stellar Company has the following investments as of December 31, 2017 Investments in common stock of Laser Company $1,460,000 Investment in debt securities of FourSquare Company $3,230,000 In both investments, the carrying value and the fair value of these two investments are the same at December 31, 2017. Stellar's stock investments does not result in significant influence on the operations of Laser Company. Stellar's debt investment is considered held-to-maturity. At December 31, 2018, the shares in Laser Company are valued at $990,000; the debt investment securities of FourSquare are valued at $2,430,000. Assume that these investments are considered impaired. Your answer is correct. Prepare the journal entries for these two securities at December 31, 2018, assuming that they are permanently impaired. (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 O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2018 Loss on Impairment 470000 470000 Equity Investments (Entry for investments in Laser Company) Loss on Impairment 800000 Debt Investments 800000 Entry for of investments in FourSquare Company)

Explanation / Answer

(b)

No entry would be recorded as impaired securities cannot be adjusted upwards.

Date Account titles and explanation Debit Credit Dec. 31, 2019 No entry

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