LED Corporation owns 100,000 shares of Branch Pharmaceuticals common stock and classifies its investment as securities available-for-sale. The market price of LED’s investment in Branch’s stock fell more than 30%, by $4.50 per share, due to concerns about one of the company’s principal drugs. The concerns were justified when the FDA banned the drug. $1.00 per share of that decline in value already had been included in OCI as a temporary unrealized loss in a prior period. What journal entries should LED record to account for the decline in market value in the current period? How should the decline affect net income and comprehensive income?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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LED Corporation owns 100,000 shares of Branch Pharmaceuticals common stock and classifies its investment as securities available-for-sale. The market price of LED’s investment in Branch’s stock fell more than 30%, by $4.50 per share, due to concerns about one of the company’s principal drugs. The concerns were justified when the FDA banned the drug. $1.00 per share of that decline in value already had been included in OCI as a temporary unrealized loss in a prior period. What journal entries should LED record to account for the decline in market value in the current period? How should the decline affect net income and comprehensive income?

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