Cost and Fair Value Data for the Trading Securities of Clifford

question 126

Short Answer

Cost and fair value data for the trading securities of Clifford Company at December 31, 2014, are $100,000 and $79,000, respectively. Which of the following correctly presents the adjusting journal entry to record the securities at fair value?

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Definitions:

Par-value

The par value of a bond, share of stock, or coupon as declared by the issuer.

Yield To Maturity

The total return anticipated on a bond if held until it matures, including all interest payments and the repayment of principal.

Zero-coupon Bonds

Bonds that do not offer interest payments but are sold at a deep discount to their face value, maturing at par.

Conversion Premium

The additional cost above the market value of the underlying asset that an investor pays to own a convertible security, such as convertible bonds.