LED Corporation owns 100,000 shares of Branch Pharmaceuticals common stock and classifies its investment as securities available-for-sale. The market price of LED’s investment in Branch’s stock fell more than 30%, by $4.50 per share, due to concerns about one of the company’s principal drugs. The concerns were justified when the FDA banned the drug. $1.00 per share of that decline in value already had been included in OCI as a temporary unrealized loss in a prior period. What journal entries should LED record to account for the decline in market value in the current period? How should the decline affect net income and comprehensive income?

SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter18: Comparative Forms Of Doing Business
Section: Chapter Questions
Problem 34P
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LED Corporation owns 100,000 shares of Branch Pharmaceuticals common stock and classifies its investment as securities available-for-sale. The market price of LED’s investment in Branch’s stock fell more than 30%, by $4.50 per share, due to concerns about one of the company’s principal drugs. The concerns were justified when the FDA banned the drug. $1.00 per share of that decline in value already had been included in OCI as a temporary unrealized loss in a prior period. What journal entries should LED record to account for the decline in market value in the current period? How should the decline affect net income and comprehensive income?

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