At the end of 2018, Hodge Company prepared the following schedule of investments in trading debt securities (all of which were acquired at par value):Company12/31/2018 Book Value12/31/2018 Fair ValueThompson Company$75,000$74,200Stevens Company40,00043,100Totals$115,000$117,300During 2019, the following transactions occurred:July 1Purchased Little Company debt securities for $100,000 (which is equal to par value). The securities carry an annual interest rate of 10%, mature on December 31, 2021, and pay interest seminannually on July 1 and December 31.Oct. 11Sold all of the Thompson Company securities for $73,000 plus interest of $2,800.Dec. 31Received interest of $5,000 on the Stevens Company and Little Company debt securities, and the following yearend total market values were available: Stevens Company debt securities, $45,000; Little Company debt securities, $98,000.Required:1.Prepare journal entries to record the preceding information.2.Next Level If Terry uses IFRS, how would the accounting for investments be different from U.S. GAAP?

Investment means an asset purchased in expectation of earning a return on such investment in future…

Answered: At the end of 2018, Hodge Company…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 9E

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At the end of 2018, Hodge Company prepared the following schedule of investments in trading debt securities (all of which were acquired at par value):

Company	12/31/2018 Book Value	12/31/2018 Fair Value
Thompson Company	$75,000	$74,200
Stevens Company	40,000	43,100
Totals	$115,000	$117,300

During 2019, the following transactions occurred:

July 1	Purchased Little Company debt securities for $100,000 (which is equal to par value). The securities carry an annual interest rate of 10%, mature on December 31, 2021, and pay interest seminannually on July 1 and December 31.
Oct. 11	Sold all of the Thompson Company securities for $73,000 plus interest of $2,800.
Dec. 31	Received interest of $5,000 on the Stevens Company and Little Company debt securities, and the following yearend total market values were available: Stevens Company debt securities, $45,000; Little Company debt securities, $98,000.

Required:

1.	Prepare journal entries to record the preceding information.
2.	Next Level If Terry uses IFRS, how would the accounting for investments be different from U.S. GAAP?

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