Exercise 17-21
Presented below is selected information related to the financialinstruments of Dawson Company at December 31, 2014. This is DawsonCompany’s first year of operations.
CarryingAmount
Fair Value(at December 31)
Investment in debt securities (intent is to hold tomaturity)
$46,010
$47,810
Investment in Chen Company stock
816,500
917,200
Bonds payable
225,200
202,300
(a) Dawson elects to use the fair value optionwhenever possible. Assuming that Dawson’s net income is $136,200 in2014 before reporting any securities gains or losses, determineDawson’s net income for 2014.
Dawson’s net income for 2014
$
(b) Record the journal entry, if any, necessary atDecember 31, 2014, to record the fair value option for the bondspayable. (Credit account titles are automaticallyindented when amount is entered. Do not indent manually. If noentry is required, select “No Entry” for the account titles andenter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2014
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