Brief Exercise 9-14 Concord Ltd. has a single debt investment that it accounts for using FV-OCI recycled to net income. The carrying value of the debt investment on July 1 after the collection of interest and amortization of premium was $85,580. To date, $1,290 of unrealized losses in fair value adjustments have been recorded to other comprehensive income. On July 1, when the market value of the investment is $85,110, Gauthier sold the debt investment. Using the three-step approach, record the July 1 entries for the sale and reclassification (recycling) entry to net income. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit (To adjust to fair value at date of disposal)
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
PLEASE USE ACCOUNTS OUT OF THIS LIST:
Accumulated Other Comprehensive Income
Allowance for Investment Impairment
Bond Investment at Amortized Cost
Cash
Dividends Receivable
Dividend Revenue
FV-NI Investments
FV-OCI Investments
Gain on Disposal of Investments in Associate
Gain on Disposal of Investments - Cost/Amortized Cost
Gain on Disposal of Investments - FV-NI
Gain on Disposal of Investments - FV-OCI
Gain or Loss in Value of Investment Property
GST Receivable
Interest Expense
Interest Income
Interest Payable
Interest Receivable
Investment in Associate
Investment Income or Loss
Loss on Discontinued Operations
Loss on Disposal of Investments - Cost/Amortized Cost
Loss on Disposal of Investments - FV-NI
Loss on Disposal of Investments - FV-OCI
Loss on Impairment
No Entry
Note Investment at Amortized Cost
Other Investments
Recovery of Loss from Impairment
Retained Earnings
Unrealized Gain or Loss
Unrealized Gain or Loss - OCI
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