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3 August, 21:19

On December 31, 2017, Reggit Company held the following short-term investments in its portfolio of available-for-sale securities. Reggit had no short-term investments in its prior accounting periods. Prepare the December 31, 2017, adjusting entry to report these investments at fair value.

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  1. 3 August, 23:00
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    Complete Question:

    Fair Value Adjustment Journal General Computation of fair value adjustment. Fair Value Adjustment Computation - Available for Sale Portfolio Cost Fair ValueUnrealized Verrizano Corporation bonds payable Preble Corporation notes payable Lucerne Company common stock Total $ 66,500 S 61,900 46,400 85,100 $ 208,400 $ 193,400 54,000 87,900 Fair Value Adjustment General Journal

    Answer:

    Dr Unrealized loss - Equity $15,000

    Cr Available-For-Sale Securities $15,000

    Explanation:

    The difference of the cost and fair value of the portfolio gives us the loss of $15,000 which must be accounted for in accounting books as under:

    Dr Unrealized losses $15,000

    Cr Available-For-Sale Securities $15,000
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