At December 31, 2017, a company reported the following minority passive equity investments and related items: Investments in trading securities (at cost): $500,000Investments in available-for-sale securities (at cost): $350,000Accumulated other comprehensive income from investments in AFS securities: Unrealized gain of $30,000Fair value adjustment?Trading securities: Unrealized gain $ 25,000 Required:Prepare the journal entries on 1/1/2018 to transition to the new rules for minority passive equity investments (ignore income tax).
What will be an ideal response?
1) Reclassify securities categories
| Investments in equity securities?Fair value | 905,000 | |||
| Investments in trading securities at cost | 500,000 | |||
| Fair value adjustment on trading securities | 25,000 | |||
| Investments in available-for-sale securities | 350,000 | |||
| Fair value adjustment?Available-for-sale securities | 30,000 |
| Accumulated other comprehensive income | 30,000 | |||
| Retained Earnings | 30,000 |
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