Carpark Services began operations in 20X1 and maintains investments in available-for-sale debt securities. The year-end cost and fair values for its portfolio of these debt securities follow.
| Available-for-Sale Securities | Cost | Fair Value |
|-------------------------------|----------|------------|
| December 31, 20X1 | $275,000 | $277,000 |
| December 31, 20X2 | $360,000 | $372,000 |
20X1 is Available-for-Sale $2,000.
b. Debit Fair Value Adjustment Available-for-Sale $2,000; Credit Unrealized Gain - Equity $2,000.
c. Debit Fair Value Adjustment Available-for-Sale $2,000; Credit Unrealized Loss - Equity $2,000.
d. Debit Realized Loss Income $2,000; Credit Fair Value Adjustment Available-for-Sale $2,000.
16. Landmark Corporation buys $490,000 of Schroeter Company's 8%, 5-year bonds payable, at par value on September 1. Interest payments are made semiannually. Landmark plans and has the ability to hold the bonds for the 5-year life. The journal entry to record the purchase should include:
a. Debit to Debt Investments Held-to-maturity $490,000.
b. Debit to Debt Investments Available-for-sale $490,000.
c. Debit to Stock Investments $490,000.
d. Debit to Debt Investments Trading $490,000.
17. The account Unrealized Gain (Loss) on Available-for-Sale Investments should be included on the:
a. Balance sheet as an adjustment to the asset account.
b. Statement of retained earnings.
c. Balance sheet as an adjustment to stockholders' equity.
d. Income statement as other revenue (expense).
18. Held-to-maturity securities:
a. Are reported at their fair market value on the balance sheet date.
b. Are primarily purchased to earn interest revenue.
c. Include both stocks and bonds.
d. All of these choices are correct.