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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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On September 30, Franz Corporation notices a decline in value of its investment in held-to-maturity bonds. On that date, the carrying value of the bonds is $38,500 and the fair value is $22,980. Franz evaluation of this investment reveals that expected credit losses are $10,000. Prepare the journal entry to record the impairment.

To determine

Record the journal entry for the impairment in investment on September 30.

Explanation

Investment: It refers to the process of using the currently held excess cash to earn profitable returns in future. The investments can be made in equity securities such as shares or debt securities such as bonds.

Record the journal entry for the impairment in investment on September 30.

DateAccount title and explanationDebit ($)Credit ($)
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