Vaughn Corporation has municipal bonds classified as a held-to-maturity at December 31, 2020. These bonds have a par value of $766,000, an amortized cost of $766,000, and a fair value of $688,000. The company believes that impairment accounting is now appropriate for these bonds. Prepare the journal entry to recognize the impairment. What is the new cost basis of the municipal bonds? Given that the maturity value of the bonds is $766,000, should Vaughn Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds? At December 31, 2021, the fair value of the municipal bonds is $724,000. Prepare the entry (if any) to record this information.
Vaughn Corporation has municipal bonds classified as a held-to-maturity at December 31, 2020. These bonds have a par value of $766,000, an amortized cost of $766,000, and a fair value of $688,000. The company believes that impairment accounting is now appropriate for these bonds. Prepare the journal entry to recognize the impairment. What is the new cost basis of the municipal bonds? Given that the maturity value of the bonds is $766,000, should Vaughn Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds? At December 31, 2021, the fair value of the municipal bonds is $724,000. Prepare the entry (if any) to record this information.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Vaughn Corporation has municipal bonds classified as a held-to-maturity at December 31, 2020. These bonds have a par value of $766,000, an amortized cost of $766,000, and a fair value of $688,000. The company believes that impairment accounting is now appropriate for these bonds.
Prepare the journal entry to recognize the impairment.
What is the new cost basis of the municipal bonds?
Given that the maturity value of the bonds is $766,000, should Vaughn Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?
At December 31, 2021, the fair value of the municipal bonds is $724,000. Prepare the entry (if any) to record this information.
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