Element Company had the following long-term available-for-sale securities in its portfolio at December 31 for each of the years listed. The year-end cost and fair values for its portfolio follow. Beginning with Year 1, prepare the appropriate journal entry to record each year-end market adjustment for these securities.Available-for-Sale SecuritiesCostFairValueYear 1$ 404,000$ 410,000Year 2406,000414,000Year 3461,000472,000??
What will be an ideal response?
| Year 1 | Fair value Adjustment-Available-for-Sale (LT)…… | 6,000 | ? |
| ? | Unrealized Gain-Equity | ? | 6,000 |
| ? | ? | ? | ? |
| Year 2 | Fair value Adjustment-Available-for-Sale (LT)…. | 2,000 | ? |
| ? | ? | ? | ? |
| ? | Unrealized Gain-Equity……………………… | ? | 2,000 |
| ? | ? | ? | ? |
| Year 3 | Fair value Adjustment-Available-for-Sale (LT)…. | 3,000 | ? |
| ? | Unrealized Gain-Equity……………………… | ? | 3,000 |
| ? | ? | ? | ? |
Year 2: $414,000 ? $406,000 = $8,000 net gain less prior year gain $6,000 = $2,000
Year 3: $472,000 ? $461,000 = $11,000 net gain less prior year gain $8,000 = $3,000
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