Answered: Novi purchased ABC bonds on 1/1/22.…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 1MC

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Question

Novi purchased ABC bonds on 1/1/22. Data regarding these available-for-sale securities follow:

	Cost	MV
December 31, 2022	$150,000	$130,000
December 31, 2023	150,000	161,000
December 31, 2024	150,000	155,000

On 1/1/25, Novi sold $40,000 (cost) of the securities for $40,100. Market Value of the remaining securities at 12/31/25 was $108,000.

The balance of the Fair Value Adjustment account included on the 12/31/25 balance sheet is:

a.$2,000 debit

b.$2,000 credit

c.$2,100 debit

d.$1,900 credit

e.$1,900 debit

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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