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9 May, 01:07

The accounting records of Jamaican Importers, Inc., at January 1, 2018, included the following: Assets: Investment in IBM common shares$1,395,000 Less: Fair value adjustment (150,000) $1,245,000 No changes occurred during 2018 in the investment portfolio.

Required: Prepare appropriate adjusting entry (s) at December 31, 2018, assuming the fair value of the IBM common shares was: $1,187,000 $1,287,000 $1,425,000

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  1. 9 May, 03:26
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    unrealized loss 58,000 debit

    investment on IBM 58,000 credit

    --to record for a--

    investment on IBM 42,000 debit

    unrealized loss 42,000 credit

    --to record for b--

    investment on IBM 200,000 debit

    unrealized loss 150,000 credit

    unrealized gain 50,000 credit

    --to record for c--

    Explanation:

    a) 1,187,000 - 1,245,000 = - 58,000

    as the investment decrased again, we post an unrealized loss to OCI as by 58,000

    b) 1,287,000 - 1,245,000 = 42,000

    as there is an urealized loss yet to realized swe will reduce it. As far as the stock investment increasetheir valeu this loss will be write-off

    c) 1,425,000 - 1,245,000 = 200,000

    here we have enought to offset the unealized loss entirely. And even recognize an unrealzied gain.
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