On January 1, 2020, a company holds an investment in corporate bonds, reported on its balance sheet at $850,000. The company originally purchased the investment at a par value of $835,000.
Required a. Assume the company classifies the securities as trading securities. In 2020, it sells the securities for $855,000. Prepare the journal entry to record the sale, assuming no entries have been made previously in 2020.
b. Repeat Part a., but this time assume the securities are classified as available-for-sale.
c. Assume the securities are classified as available-for-sale, and they were not sold in 2020. Their value at December 31, 2020 is $800,000, attributed to the investee's decline in credit rating. Prepare the journal entry to record the impairment loss, assuming no other entries have been made previously in 2020.

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The Answer of On January 1, 2020, a company holds an investment in corporate bonds, reported on its balance sheet at $850,000. The company originally purchased the investment at a par value of $835,000.
Required a. Assume the company classifies the securities as trading securities. In 2020, it sells the securities for $855,000. Prepare the journal entry to record the sale, assuming no entries have been made previously in 2020.
b. Repeat Part a., but this time assume the securities are classified as available-for-sale.
c. Assume the securities are classified as available-for-sale, and they were not sold in 2020. Their value at December 31, 2020 is $800,000, attributed to the investee's decline in credit rating. Prepare the journal entry to record the impairment loss, assuming no other entries have been made previously in 2020.

On January 1, 2020, a Company Holds an Investment in Corporate