On December 31, 2017, Reggit Company held the following short-term investments in its portfolio of available-for-sale securities. Reggit had no short-term investments in its prior accounting periods. Prepare the December 31, 2017, adjusting entry to report these investments at fair value.

Complete Question:

Fair Value Adjustment Journal General Computation of fair value adjustment. Fair Value Adjustment Computation - Available for Sale Portfolio Cost Fair ValueUnrealized Verrizano Corporation bonds payable Preble Corporation notes payable Lucerne Company common stock Total $ 66,500 S 61,900 46,400 85,100 $ 208,400 $ 193,400 54,000 87,900 Fair Value Adjustment General Journal

Answer:

Dr Unrealized loss - Equity $15,000

Cr Available-For-Sale Securities $15,000

Explanation:

The difference of the cost and fair value of the portfolio gives us the loss of $15,000 which must be accounted for in accounting books as under:

Dr Unrealized losses $15,000

Cr Available-For-Sale Securities $15,000