FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Indigo Corporation has municipal bonds classified as a held-to-maturity at December 31, 2025. These bonds have a par value of
$732,000, an amortized cost of $732,000, and a fair value of $648,000. The company believes that impairment accounting is now
appropriate for these bonds.
Prepare the journal entry to recognize the impairment. (List debit entry before credit entry. Credit account titles are automatically
indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the
amounts.)
Account Titles and Explanation
eTextbook and Media
List of Accounts
What is the new carrying value of the municipal bonds?
New carrying value
$
eTextbook and Media
List of Accounts
Given that the maturity value of the bonds is $732,000, should Indigo Corporation amortize the difference between the carrying
amount and the maturity value over the life of the bonds?
Debit
Account Titles and Explanation
Credit
At December 31, 2026, the fair value of the municipal bonds is $692,000. Prepare the entry (if any) to record this information.
(List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and enter O for the amounts.)
Debit
Credit
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Transcribed Image Text:Indigo Corporation has municipal bonds classified as a held-to-maturity at December 31, 2025. These bonds have a par value of $732,000, an amortized cost of $732,000, and a fair value of $648,000. The company believes that impairment accounting is now appropriate for these bonds. Prepare the journal entry to recognize the impairment. (List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation eTextbook and Media List of Accounts What is the new carrying value of the municipal bonds? New carrying value $ eTextbook and Media List of Accounts Given that the maturity value of the bonds is $732,000, should Indigo Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds? Debit Account Titles and Explanation Credit At December 31, 2026, the fair value of the municipal bonds is $692,000. Prepare the entry (if any) to record this information. (List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Debit Credit
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