Bloom Corporation purchased $1,450,000 of Taylor Company 5% bonds, at their face amount, with the intent and ability to hold the bonds until they matured in 2025, so Bloom classifies its investment as AFS. Unfortunately, a combination of problems at Taylor Company and in the debt securities market caused the fair value of the Taylor investment to decline to $960,000 during 2021. Required:
For each of the following scenarios, prepare appropriate entry(s) at December 31, 2018, and indicate how the scenario will affect the 2018 income statement (ignoring income taxes).

a. Bloom now believes it is more likely than not that it will have to sell the Taylor bonds before the bonds have a chance to recover their fair value. Of the $490,000 decline in fair value, Bloom attributes $295,000 to credit losses, and $195,000 to noncredit losses.
b. Bloom does not plan to sell the Taylor bonds prior to maturity, and does not believe it is more likely than not that it will have to sell the Taylor bonds before the bonds have a chance to recover their fair value. Of the $490,000 decline in fair value, Bloom attributes $295,000 to credit losses, and $195,000 to noncredit losses.

a. Dr OTT impairment loss$490,000

Cr Discount on bond investment $490,000

Income statement -$490,000

B.Dr OTT impairment loss$295,000

Cr Discount on bond investment $295,000

Dr OTT impairment loss - other comprehensive income$195,000

Cr Fair value adjustment - non credit losses $195,000

Income statement-$295,000

Explanation:

a. Prepare of the appropriate entry(s) at December 31, 2018 and indication for how the scenario will affect the 2018 income statement

31.12.21

Dr OTT impairment loss$490,000

Cr Discount on bond investment $490,000

(To record impairment loss of investment)

Effect on net income : Earnings are reduced by $490,000

INCOME STATEMENT

Other than temporary impairment loss- $490,000

b. Prepare of the appropriate entry(s) at December 31, 2018 and indication for how the scenario will affect the 2018 income statement

31.12.2021

Dr OTT impairment loss$295,000

Cr Discount on bond investment $295,000

(To record credit losses of impairment of investment)

31.12.2021

Dr OTT impairment loss - other comprehensive income$195,000

Cr Fair value adjustment - non credit losses $195,000

(To record non - credit losses of impairment loss of investment)

Effort net income : Earnings are reduced by

INCOME STATEMENT

Other than temporary impairment loss-$490,000

Less : Portion recognized in other comprehensive income$195,000

Other than temporary recognized in earnings -$295,000

sound is invisible, but sometimes we can feel it. when a kettle-drum is thumped with a stick that time the tight drum skin moving up and down very quickly for some time and then it pumped sound waves into the air. loudspeakers also work in a similar manner.

components of a speaker:

electromagnet

in order to translate an electrical signal into an audible sound, an electromagnet is used in looudspeakers

  suspension

suspension is used to   center the voice coil in the gap of the magnet and it exerts a restoring force to keep it there. suspension is used to limits the maximum mechanical excursion of the diaphragm and voice coil.

voice coil

voice coil is a coil of wire which is attached to the apex of a loudspeaker cone. it provides the motive force to the cone by the reaction of a magnetic field to the current passing through it.

cone

in a   loudspeaker, a   thin, semi-rigid membrane attached to the voice coil, which moves in a magnetic gap due to which it vibrates   and produced sound. it is known as diaphragm and it can also be called a cone, though not all speaker diaphragms are cone-shaped.

surround

surround is also known as front suspension. surround is used to join the cone to the chassis. together with the suspension it controls the cone excursion, and it is also used to   determine how energy which is   travelling through the cone is absorbed, and how the speaker limits when it reaches the ends of its travel.

dustcap

dustcap is used to protect the voice coil from dust and dirt. it is a part of the cone.

how speaker work

the outer part of the cone is fastened to the outer part of the loudspeaker's circular metal rim. the inner part is fixed to   voice coil that sits just in front of a permanent magnet . when loudspeaker is hooked up to a stereo, electrical signals feed through the speaker cables into the coil. it will convert the coil into an electromagnet magnet . when electricity flows back and forth in the cables, the electromagnet either repels or attract the permanent magnet. this moves the coil back and forth, and it pull and push the loudspeaker cone. like a drum skin vibrating back and forth, the moving cone pumps sounds out into the air.in this way loudspeakers works.

n

explanation: