Prepare Journal Entry: January 1( Beginning balance: No entry required) Johnny A
ID: 2500608 • Letter: P
Question
Prepare Journal Entry:
January 1( Beginning balance: No entry required)
Johnny Appleseed is currently holding 8,500 shares of Golden Mountain, Inc. common shares in its available-for-sale portfolio. These shares cost $20/share. There is a $17,000 debit balance in the Fair Value Adjustment account.
January 1( Beginning balance: No entry required)
Johnny Appleseed is currently holding 8,500 shares of Golden Mountain, Inc. common shares in its available-for-sale portfolio. These shares cost $20/share. There is a $17,000 debit balance in the Fair Value Adjustment account.
Explanation / Answer
Fair value Adjustment A/c $ 17,000
To unrecognised holding gain $ 17,000
Since it is an Investment classified under AFS the unrecognised holding gain is shown in other comprehensive income. It will not be taken to calculate net income for the period.