Company A estimated that it will receive less interest payments and principal payments from its Available-for-Sale investments in Company B’s bonds. Company A does not intend to sell the bonds before they will recover. See the information below: Amortized cost of Company B bonds: $800,000. Discounted value of estimated payments at the interest rate on the date of bond inception: $650,000. Fair value of Company B bonds: $400,000. How will Company A record this assessment? a. Company A will debit Credit Loss Expense by $150,000. b. Company A will debit loss on impairment by $400,000. c. Company A will credit Investment account by $800,000. d. Company A will not record this assessment given that the investment is AFS. e. Company A will debit Credit Loss Expense by $400,000
Company A estimated that it will receive less interest payments and principal payments from its Available-for-Sale investments in Company B’s bonds. Company A does not intend to sell the bonds before they will recover. See the information below:
Amortized cost of Company B bonds: $800,000.
Discounted value of estimated payments at the interest rate on the date of bond inception: $650,000.
Fair value of Company B bonds: $400,000.
How will Company A record this assessment?
| a. |
Company A will debit Credit Loss Expense by $150,000. |
|
| b. |
Company A will debit loss on impairment by $400,000. |
|
| c. |
Company A will credit Investment account by $800,000. |
|
| d. |
Company A will not record this assessment given that the investment is AFS. |
|
| e. |
Company A will debit Credit Loss Expense by $400,000. |
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