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E17-21B (Fair Value Option) Presented below is selected information related to the financial instruments of Kirkland Company at December 31, 2014. This is Kirkland Company?s first year of operations. Carrying Fair Value Amount (at December 31) Investment

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Question

E17-21B (Fair Value Option) Presented below is selected information related to the financial instruments of Kirkland Company at December 31, 2014. This is Kirkland Company?s first year of operations.;Carrying Fair Value;Amount (at December 31);Investment in debt securities (intent is to hold to maturity) $ 60,000 $ 59,000;Investment in Olive Company stock 400,000 430,000;Bonds payable 500,000 490,000;Instructions;(a) Kirkland elects to use the fair value option whenever possible. Assuming that Kirkland?s net income is $360,000 in 2014 before reporting any securities gains or losses, determine Kirkland?s net income for 2014.;(b) Record the journal entry, if any, necessary at December 31, 2014, to record the fair value option for the bonds payable.

 

Paper#78447 | Written in 18-Jul-2015

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