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4 April, 22:12

At December 31, 2018, Atlanta Company has an equity portfolio valued at $160,000. Its cost was $132,000. If the Securities Fair Value Adjustment has a debit balance of $8,000, which of the following journal entries is required at December 31, 2018

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  1. 4 April, 23:22
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    The Journal entry is as follows:

    Fair value adjustment A/c Dr. $20,000

    To unrealized holding gain or loss-income $20,000

    (To record the adjustment)

    Workings:

    Ending balance = equity portfolio value - cost

    = $160,000 - $132,000

    = $28,000

    Necessary Adjustment = Ending balance - Beginning balance

    = $28,000 - $8,000

    = $20,000
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