At December 31, 2020, the available-for-sale debt portfolio for Blossom, Inc. is as follows.
Security Cost Fair Value Unrealized Gain (Loss)
A $17,900 $15,200 $(2,700)
B 11,000 15,000 4,000
C 24,000 26,500 2,500
Total $52,900 $56,700 3,800
Previous fair value adjustment balance—Dr. 400
Fair value adjustment—Dr. $3,400
On January 20, 2021, Blossom, Inc. sold security A for $15,300. The sale proceeds are net of brokerage fees. Blossom, Inc. reports net income in 2020 of $123,000 and in 2021 of $142,000. Total holding gains (including any realized holding gain or loss) equal $41,000 in 2021.
Prepare a statement of comprehensive income for 2020, starting with net income.
Prepare a statement of comprehensive income for 2021, starting with net income.

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Tundexi Tundexi · Answer 1 · 2021-03-09T13:34:29+01:00

Answer:

a. Blossom Inc

Statement of Comprehensive Income

For the Year Ended December 31, 2020

Particulars Amount

Net income $123,000

Other comprehensive income:

Add: Unrealized holding gain $3,400

Comprehensive income $126,400

b. Blossom Inc

Statement of Comprehensive Income

For the Year Ended December 31, 2021

Particulars Amount

Net income $142,000

Other comprehensive income:

Total holding gains in 2021 $41,000

Add: Reclassification adjustment- $2,700

for loss included in net income $38,300

Comprehensive income $180,300

Note:

Particulars Amount

Net amount received from the sale of Security A $17,900

Less: Cost of Security A $15,200

Loss on the sale of Security A ($2,700)