Presented below is information related to the purchases of common stock by Indigo Company during 2020. Cost(at purchase date) Fair Value(at December 31)Investment in Arroyo Company stock $ 90,000 $ 69,000Investment in Lee Corporation stock 229,000 279,000Investment in Woods Inc. stock 188,000 199,000 Total $ 507,000 $ 547,000(Assume a zero balance for any Fair Value Adjustment account.)(a) What entry would Indigo make at December 31, 2020, to record the investment in Arroyo Company stock if it chooses to report this security using the fair value option?(b) What entry would Indigo make at December 31, 2020, to record the investments in the Lee and Woods corporations, assuming that Indigo did not select the fair value option for these investments?(Credit account titles are automatically indented when 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.)No.Account Titles and ExplanationDebitCredit(a) (b)

Answer Journal entries Date Particulars Debit($) Credit($) 31-Dec-20…

Answered: Presented below is information related…

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

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 23P

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Presented below is information related to the purchases of common stock by Indigo Company during 2020.

	Cost (at purchase date)	Fair Value (at December 31)
Investment in Arroyo Company stock	$ 90,000	$ 69,000
Investment in Lee Corporation stock	229,000	279,000
Investment in Woods Inc. stock	188,000	199,000
Total	$ 507,000	$ 547,000

(Assume a zero balance for any Fair Value Adjustment account.)

(a)		What entry would Indigo make at December 31, 2020, to record the investment in Arroyo Company stock if it chooses to report this security using the fair value option?
(b)		What entry would Indigo make at December 31, 2020, to record the investments in the Lee and Woods corporations, assuming that Indigo did not select the fair value option for these investments?

(Credit account titles are automatically indented when 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.)

No.	Account Titles and Explanation	Debit	Credit
(a)

(b)

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