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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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Answer:

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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