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galben [10]
2 years ago
11

Melrose Company has an investment in bonds issued by Roscoe Industries that are classified as available-for-sale securities. The

bonds were purchased at par. On December 31, Year 2, the Investment in Roscoe bonds account had a debit balance of $200,000, representing its amortized cost, and its Fair value adjustment account had a credit balance of $5,000. On December 31, Year 3, the amortized cost of those bonds had not changed, but the fair value of those bonds was $225,000. Which of the following will be included in the related journal entry dated December 31, Year 3?
a. Debit to Fair value adjustment for $20,000
b.Credit to Fair value adjustment for $20,000
c. Debit to Fair value adjustment for $30,000
d. Credit to Fair value adjustment for $30,000
Business
1 answer:
Andrews [41]2 years ago
4 0

Answer:

c. Debit to Fair value adjustment for $30,000

Explanation:

The first step of accounting process is Journal entry and it is made to record the transactions for process of book keeping, it defines the accounts involved and effects of  transactions on the account by debit or credit.

As the bond price is amortized earlier by 5,000 then its net realizable value was $195,000 ( $200,000 - $5,000 ). on December 31, year 3 the fair value adjusted to $225,000. so the adjusted value will be $30,000 ( $225,000 - $195,000 ). The journal entry is as follow  

                                                                    Dr.               Cr.

Dec 31, year 3

Fair value adjustment account              30000

Unrealized gain on available for sale securities        30000

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8 0
3 years ago
The average of first 10 even number is​
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Explanation:

7 0
2 years ago
Read 2 more answers
The following costs were incurred in May:
galben [10]

Answer:

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Explanation:

The computation of the conversion cost is shown below:

The conversion cost is

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= $32,800 + $25,400

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Hence, the conversion cost is $58,200

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6 0
2 years ago
Suppose you own a stock that you believe will produce a return of 13% in a good economy and 4% in a poor economy. Given the prob
agasfer [191]

Answer:

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Explanation:

Expected return is the return an investor expects from an investment given the investment's historical return or probable rates of return under different scenarios. To determine expected returns based on historical data, an investor simply calculates an average of the investment's historical return percentages and then, uses that average as the expected return for the next investment period.

In the example, the expected return would be:

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7 0
3 years ago
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3 years ago
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