17-1

PREVIEW OF CHAPTER 17

Intermediate Accounting
16th Edition
Kieso ● Weygandt ● Warfield
17-2
 17 Investments
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1 Understand the accounting for 3 Explain the equity and
investments in debt securities. consolidation methods of
accounting.
2 Understand the accounting for
investments in equity securities. 4 Evaluate other major issues
related to investments in debt
and equity securities.

17-3 LO 1
 INVESTMENT IN DEBT SECURITIES

Different motivations for investing:

 To earn a high rate of return.

 To secure certain operating or financing arrangements

with another company.

17-4 LO 1
 INVESTMENT IN DEBT SECURITIES

Companies account for investments based on

 the type of security (debt or equity) and

 their intent with respect to the investment.

ILLUSTRATION 17-1
Summary of Investment Accounting Approaches

17-5 LO 1
 Debt Investment Classifications

Debt securities represent a creditor relationship:

Type Accounting Category

 U.S. government  Held-to-maturity

securities
 Trading
 Municipal securities
 Available-for-sale
 Corporate bonds
 Convertible debt
 Commercial paper

17-6 LO 1
 Debt Investment Classifications

ILLUSTRATION 17-2
Accounting for Debt
Amortized cost is the acquisition cost adjusted for Securities by Category
the amortization of discount or premium, if
appropriate.

17-7 LO 1
 INVESTMENT IN DEBT SECURITIES

Held-to-Maturity Securities (Amortized Cost)

Classify a debt security as held-to-maturity only if it has both
1) the positive intent and

2) the ability to hold securities to maturity.

Accounted for at amortized cost, not fair value.

Amortize premium or discount

using the effective-interest
method unless the straight-line
method yields a similar result.
17-8 LO 1
 Held-to-Maturity Securities (Amortized Cost)

Illustration: Z-Smith Company purchased $100,000 of 8 percent

bonds of Bush Corporation on January 1, 2016, at a discount,
paying $92,278. The bonds mature January 1, 2021 and yield
10%; interest is payable each July 1 and January 1. Z-Smith
records the investment as follows:

January 1, 2016

Debt Investments 92,278

Cash 92,278

17-9 LO 1
 ILLUSTRATION 17-3
Schedule of Interest Revenue and
Bond Discount Amortization—
Effective-Interest Method

17-10 LO 1
 ILLUSTRATION 17-3

Illustration: Z-Smith Company records the receipt of the first

semiannual interest payment on July 1, 2016, as follows:

Cash 4,000
Debt Investments 614
Interest Revenue 4,614

17-11 LO 1
 ILLUSTRATION 17-3

Illustration: Z-Smith is on a calendar-year basis, it accrues interest

and amortizes the discount at December 31, 2016, as follows:

Interest Receivable 4,000

Debt Investments 645
Interest Revenue 4,645

17-12 LO 1
 Held-to-Maturity Securities (Amortized Cost)

Reporting of Held-to-Maturity Securities

$4645 + $4614

ILLUSTRATION 17-4
Reporting of Held-to-Maturity
Securities

17-13 LO 1
 Held-to-Maturity Securities (Amortized Cost)
ILLUSTRATION 17-3
Illustration:
Assume Z-Smith
sells its
investment in
Bush bonds on
November 1,
2020, at 99¾
plus accrued
interest. Z-Smith Calculation of amortization = $952 x 4/6 = $635
records discount
Debt Investments 635
amortization as
Interest Revenue 635
follows:

17-14 LO 1
 Held-to-Maturity Securities (Amortized Cost)

Computation of Gain on Sale of Bonds

ILLUSTRATION 17-5

Cash ($99,750+$2,667) 102,417

Interest Revenue (4/6 x $4,000) 2,667
Debt Investments 99,683
Gain on Sale of Securities 67

17-15 LO 1
 INVESTMENT IN DEBT SECURITIES

Available-for-Sale Securities
Companies report available-for-sale securities at
 fair value, with

 unrealized holding gains and losses reported as other

comprehensive income, a separate component of
stockholder’s equity, until realized.

Any discount or premium is amortized.

17-16 LO 1
 Available-for-Sale Securities Debt
Securities

Illustration (Single Security): Graffeo Corporation purchases

$100,000, 10 percent, five-year bonds on January 1, 2016, with
interest payable on July 1 and January 1. The bonds sell for
$108,111, which results in a bond premium of $8,111 and an
effective interest rate of 8 percent. Graffeo records the purchase of
the bonds on January 1, 2016, as follows.

Debt Investments 108,111

Cash 108,111

17-17 LO 1
 ILLUSTRATION 17-6
Schedule of Interest Revenue and
Bond Premium Amortization—
Effective-Interest Method

17-18 LO 1
 ILLUSTRATION 17-6

Illustration (Single Security): The entry to record interest revenue

on July 1, 2016, is as follows.

Cash 5,000
Debt Investments 676
Interest Revenue 4,324

17-19 LO 1
 Available-for-Sale Securities Debt
Securities

Interest
Revenue for
2016 = $8,621

ILLUSTRATION 17-6

Illustration (Single Security): At December 31, 2016, Graffeo makes

the following entry to recognize interest revenue.

Interest Receivable 5,000

Debt Investments 703
Interest Revenue 4,297

17-20 LO 1
 Available-for-Sale Securities Debt
Securities

ILLUSTRATION 17-6

Illustration (Single Security): To apply the fair value method to

these debt securities, assume that at December 31, 2016 the fair
value of the bonds is $105,000. Graffeo makes the following entry.

Unrealized Holding Gain or Loss—Equity 1,732

Fair Value Adjustment 1,732

17-21 LO 1
 Available-for-Sale Securities Debt
Securities

Illustration (Portfolio of Securities): Herringshaw Corporation has

two debt securities classified as available-for-sale. The following
illustration identifies the amortized cost, fair value, and the amount
of the unrealized gain or loss.

ILLUSTRATION 17-7
Computation of Fair Value Adjustment—Available-for-Sale Securities (2017)
17-22 LO 1
 Available-for-Sale Securities Debt
Securities
ILLUSTRATION 17-7

Prepare the adjusting entry Herringshaw would make on December

31, 2017 to record the loss.

Unrealized Holding Gain or Loss—Equity 9,537

Fair Value Adjustment 9,537
17-23 LO 1
 Available-for-Sale Securities Debt
Securities

Sale of Available-for-Sale Securities

If company sells bonds before maturity date:
 It must make entries to remove from the Debt Investments
account the amortized cost of bonds sold.

 Any realized gain or loss on sale is reported in the “Other”

section of the income statement.

17-24 LO 1
 Sale of Available-for-Sale Securities

Illustration: Herringshaw Corporation sold the Watson bonds (from

Illustration 17-7) on July 1, 2018, for $90,000, at which time it had
an amortized cost of $94,214.
ILLUSTRATION 17-8
Computation of Loss on Sale of Bonds

Cash 90,000
Loss on Sale of Investments 4,214
Debt Investments 94,214

17-25 LO 1
 Sale of Available-for-Sale Securities

Illustration: Herringshaw reports this realized loss in the “Other

expenses and losses” section of the income statement. Assuming
no other purchases and sales of bonds in 2018, Herringshaw on
December 31, 2018, prepares the information:

ILLUSTRATION 17-9
Computation of Fair Value Adjustment—Available-for-Sale Securities (2018)
17-26 LO 1
 Sale of Available-for-Sale Securities

Illustration: Herringshaw records the following at December 31,

2018.
ILLUSTRATION 17-9

Fair Value Adjustment 4,537

Unrealized Holding Gain or Loss—Equity 4,537
17-27 LO 1
 Available-for-Sale Securities Debt
Securities

Financial Statement Presentation

ILLUSTRATION 17-10
Reporting of Available-for-
Sale Securities

17-28 LO 1
 INVESTMENT IN DEBT SECURITIES

Trading Securities (Fair Value Through Net Income)

Companies report trading securities at
 fair value, with

 unrealized holding gains and losses reported as part of

net income.

Any discount or premium is amortized.

A holding gain or loss is the net change in the fair value of a

security from one period to another, exclusive of dividend or
interest revenue recognized but not received.

17-29 LO 1
 Trading Securities Debt
Securities

Illustration: On December 31, 2017, Koopmans Publishing

Corporation determined its trading securities portfolio to be as
follows:

ILLUSTRATION 17-11
Computation of Fair Value Adjustment—Trading
Securities Portfolio (2017)

17-30 LO 1
 Trading Securities Debt
Securities

Illustration: At December 31, Koopmans Publishing makes an

adjusting entry:
ILLUSTRATION 17-11

Fair Value Adjustment 3,750

Unrealized Holding Gain or Loss—Income 3,750
17-31 LO 1
 Trading Securities Debt
Securities

Illustration: (Trading Securities) Hendricks Corporation purchased

trading investment bonds for $50,000 at par. At December 31,
Hendricks received annual interest of $2,000, and the fair value of
the bonds was $47,400.

Instructions:

a) Prepare the journal entry for the purchase of the investment.

b) Prepare the journal entry for the interest received.

c) Prepare the journal entry for the fair value adjustment.

17-32 LO 1
 Trading Securities Debt
Securities

Illustration: (Trading Securities) Hendricks Corporation purchased

trading investment bonds for $50,000 at par. At December 31,
Hendricks received annual interest of $2,000, and the fair value of
the bonds was $47,400. Prepare the journal entry for the
purchase of the investment.

Debt Investments 50,000

Cash 50,000

17-33 LO 1
 Trading Securities Debt
Securities

Illustration: (Trading Securities) Hendricks Corporation purchased

trading investment bonds for $50,000 at par. At December 31,
Hendricks received annual interest of $2,000, and the fair value of
the bonds was $47,400. Prepare the journal entry for the interest
received.

Cash 2,000
Interest Revenue 2,000

17-34 LO 1
 Trading Securities Debt
Securities

Illustration: (Trading Securities) Hendricks Corporation purchased

trading investment bonds for $50,000 at par. At December 31,
Hendricks received annual interest of $2,000, and the fair value of
the bonds was $47,400. Prepare the journal entry for the fair value
adjustment.

Unrealized Holding Loss – Income 2,600

Fair Value Adjustment 2,600

17-35 LO 1
 WHAT DO THE NUMBERS MEAN? WHAT’STO
YOUR
HAVEPRINCIPLE
AND TO HOLD

Wall Street is a romantic place these days. Recently, many banks, especially big
ones, entered into long-term relationships with their securities portfolios, promising
that hundreds of billions of dollars of assets will be “held-to-maturity.” As a result,
the banks may appear to have higher book values and be better capitalized in the
eyes of regulators even if the value of these securities declines.
In fact, many banks, especially the
large ones, have recently shifted
their debt investments portfolios
into the “held-to-maturity” category
from trading or available-for-sale.
For example, in a recent 18-month
period, banks have moved $293
billion of their investments to the
held-to-maturity category. That
means that about $640 billion, or
one in five dollars in the banks’
portfolios, cannot be sold easily, as
shown in the chart to the right.
17-36 (continued) LO 1
 WHAT DO THE NUMBERS MEAN? WHAT’STO
YOUR
HAVEPRINCIPLE
AND TO HOLD

Why the shift? One major reason is that banks recognize when securities are
classified as held-to-maturity, they are carried at their original cost, typically face
value. As you have learned, declines in market values hit neither book value nor
earnings. Their value is written down only if they are considered to be permanently
impaired. If long-term interest rates are expected to rise (which appears to be the
consensus today), then bond prices will drop. And if bond prices drop, banks that
hold trading or available-for-sale securities will have their earnings and capital drop.
As a result, the shift to held-to-maturity portfolios provides protection from this level
of volatility.
But banks should be careful. For example, if the bank has liquidity problems, it
may have to sell these held-to-maturity securities for a large loss at inopportune
times. And given the financial crisis of 2008, the process of trying to hype capital
and maintain less volatile earnings may backfire if investors believe that
shenanigans are taking place in the financial institution area.

Sources: John Carney, “Accounting Trick Can Help Banks Dodge Some Capital Pain,” Wall Street
Journal (March 28, 2014); and Michael Rapoport, “Banks Shift Bond Portfolios,” Wall Street Journal
(March 23, 2015).

17-37 LO 1
 17 Investments
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1 Understand the accounting for 3 Explain the equity and
investments in debt securities. consolidation methods of
accounting.
2 Understand the accounting for
investments in equity securities. 4 Evaluate other major issues
related to investments in debt
and equity securities.

17-38 LO 2
 INVESTMENTS IN EQUITY SECURITIES

Represent ownership of capital stock.

Cost includes:
 price of the security, plus

 broker’s commissions and fees related to purchase.

The degree to which one corporation (investor) acquires an

interest in the common stock of another corporation (investee)
generally determines the accounting treatment for the
investment subsequent to acquisition.

17-39 LO 2
 INVESTMENTS IN EQUITY SECURITIES

Ownership Percentages
0 ------------------20% ---------------- 50% ---------------- 100%

Investor has Investor has Investor has

passive significant controlling
interest influence interest

Investment Investment Investment valued on

valued using valued using parent’s books using Cost
Fair Value Equity Method Method or Equity Method
Method (investment eliminated in
Consolidation)

17-40 LO 2
 INVESTMENTS IN EQUITY SECURITIES

Accounting and Reporting for Equity Securities by Category

ILLUSTRATION 17-13

17-41 LO 2
 INVESTMENTS IN EQUITY SECURITIES

Holding of Less Than 20%

Accounting Subsequent to Acquisition

With Without
Readily Determinable Readily Determinable
Fair Value Fair Value
Value and report the Value and report the
investment using the investment using a
fair value method. practicability exception.*
* Entities report equity investments at cost adjusted for changes in observable
prices minus impairment. Entities recognize dividends when received and
generally recognize gains or losses when selling the securities.
17-42
LO 2
 Holdings of Less Than 20%

Upon acquisition, companies record equity securities at cost.

Illustration: On November 3, 2017, Republic Corporation purchased
common stock of three companies, each investment representing
less than a 20 percent interest.

17-43 LO 2
 Holdings of Less Than 20%

Illustration: Republic records these investments on November 3, as

follows.

Equity Investments 718,550

Cash 718,550

17-44 LO 2
 Holdings of Less Than 20%

Illustration: On December 6, 2017, Republic receives a cash

dividend of $4,200 from Campbell Soup Co.

Cash 4,200
Dividend Revenue 4,200

17-45 LO 2
 Holdings of Less Than 20%

Illustration: Republic’s available-for-sale equity security portfolio

on December 31, 2017:

ILLUSTRATION 17-14
Computation of Fair Value Adjustment—Equity Security Portfolio (2017)
17-46 LO 2
 Holdings of Less Than 20%
ILLUSTRATION 17-14

Illustration: Prepare the entry Republic would make on December 31,

2017, to record the net unrealized gains and losses.

Unrealized Holding Gain or Loss—Income 35,550

Fair Value Adjustment 35,550
17-47 LO 2
 Holdings of Less Than 20%

Illustration: On January 23, 2018, Republic sold all of its

Northwest Industries, Inc. common stock receiving net proceeds
of $287,220. Prepare the entry to record the sale.

ILLUSTRATION 17-15
Computation of Gain on
Sale of Stock

Cash 287,220
Equity Investments 259,700
Gain on Sale of Investments 27,520

17-48 LO 2
 Holdings of Less Than 20%

Illustration: On February 10, 2018, Republic purchased 20,000

shares of Continental Trucking at a price of $12.75 per share plus
brokerage commissions of $1,850 (total cost, $256,850).

ILLUSTRATION 17-16
17-49 Computation of Fair Value Adjustment—Equity Security Portfolio (2018) LO 2
 Holdings of Less Than 20%
ILLUSTRATION 17-16

Illustration:

Prepare the entry that Republic would make at December 31,

2018, to adjust its portfolio to fair value.

Fair Value Adjustment 99,800

Unrealized Holding Gain or Loss—Income 99,800

17-50 LO 2
 WHAT DO THE NUMBERS MEAN? WHAT’S YOUR PRINCIPLE
MORE DISCLOSURE, PLEASE

How to account for investment securities is a particularly sensitive area, given the
large amounts of equity investments involved. And presently companies could
report investments in equity securities at cost, equity, fair value, and full
consolidation, depending on the circumstances. As an SEC study noted, “there are
so many different accounting treatments for investments that it raises the question
of whether they are all needed.” Presented in the right-hand column is an estimate
of the percentage of companies on the major exchanges that have investments in
the equity of other entities. As the table indicates, many companies have equity
investments of some type. These investments can be substantial. For example, the
total amount of equity-method
investments appearing on
company balance sheets is
approximately $403 billion,
and the amount shown in the
income statements in any one
year for all companies is
approximately $38 billion.

Source: “Report and Recommendations Pursuant to Section 401(c) of the Sarbanes-Oxley Act of 2002 on Arrangements with Off-Balance Sheet
17-51 Implications, Special Purpose Entities, and Transparency of Filings by Issuers,” United States Securities and Exchange Commission—Office of LO 2
Chief Accountant, Office of Economic Analyses, Division of Corporation Finance (June 2005), pp. 36–39.
 17 Investments
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1 Understand the accounting for 3 Explain the equity and
investments in debt securities. consolidation methods of
accounting.
2 Understand the accounting for
investments in equity securities. 4 Evaluate other major issues
related to investments in debt
and equity securities.

17-52 LO 3
 INVESTMENTS IN EQUITY SECURITIES

Holding Between 20% and 50% (Equity Method)

An investment (direct or indirect) of 20 percent or more of the
voting stock of an investee should lead to a presumption that in
the absence of evidence to the contrary, an investor has the
ability to exercise significant influence over an investee.

In instances of “significant influence,” the investor must account

for the investment using the equity method.

17-53 LO 3
 Holdings Between 20% and 50%

Comparison of Equity Method to Fair Value

Record the investment at cost and subsequently adjust the
amount each period for
 the investor’s proportionate share of the earnings (losses)
and

 dividends received by the investor.

If investor’s share of investee’s losses exceeds the carrying amount of the

investment, the investor ordinarily should discontinue applying the equity
method and not recognize additional losses.

17-54 LO 3
ILLUSTRATION 17-17
Comparison of Fair Value Method and Equity Method
17-55 LO 3
 INVESTMENTS IN EQUITY SECURITIES

Holding of More Than 50% (Consolidation)

Controlling Interest - When one corporation acquires a voting
interest of more than 50 percent in another corporation
 Investor corporation is referred to as the parent.

 Investee corporation is referred to as the subsidiary.

 Investment in the subsidiary is reported on the parent’s

balance sheet as a long-term investment.

 Parent generally prepares consolidated financial statements.

17-56 LO 3
 WHAT DO THE NUMBERS MEAN? WHAT’S
WHO’SYOUR PRINCIPLE
IN CONTROL HERE?

Molson Coors Brewing Company owns 42 percent of the MillerCoors’ brewing

venture operating in the United States and Puerto Rico. As part of the
agreement, Molson helps the MillerCoors unit produce and sell its products in
the U.S. and Puerto Rican markets. Lenovo Group owns a significant
percentage (45 percent) of the shares of Beijing Lenovo Parasaga Information
Technology Co. (which develops and distributes computer software). Beijing
Lenovo is important to Lenovo because it develops and sells the software that
is used with Lenovo computers. In return, Beijing Lenovo depends on Lenovo
to provide the products that make its software and services valuable, as well as
perform significant customer and market support. Indeed, it can be said that to
some extent Lenovo controls Beijing Lenovo, which would likely not exist
without the support of Lenovo.
As you have learned, because a company like Lenovo owns less than 50
percent of the shares, it does not consolidate Beijing Lenovo but instead
accounts for its investment using the equity method. Under the equity method,
Lenovo reports a single income item for its profits from Beijing Lenovo and only
the net amount of its investment in the statement of financial position.
17-57 (continued) LO 3
 WHAT DO THE NUMBERS MEAN? WHAT’S
WHO’SYOUR PRINCIPLE
IN CONTROL HERE?

Equity method accounting gives Lenovo a pristine statement of financial

position and income statement, by separating the assets and liabilities and the
profit margins of the related companies from its laptop-computer businesses.
Some are critical of equity method accounting. They argue that some
investees, like Beijing Lenovo, should be consolidated. The FASB has issued
rules to consider other factors, in addition to voting interests, when determining
whether an entity should be consolidated. The FASB has tightened up
consolidation rules, so that companies will be more likely to consolidate more
of their 20–50-percent-owned investments. Consolidation of entities, such as
MillerCoors and Beijing Lenovo, is warranted if Molson and Lenovo effectively
control their equity method investments.

17-58 LO 3
 17 Investments
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1 Understand the accounting for 3 Explain the equity and
investments in debt securities. consolidation methods of
accounting.
2 Understand the accounting for
investments in equity securities. 4 Evaluate other major issues
related to investments in debt
and equity securities.

17-59 LO 4
 OTHER FINANCIAL REPORTING ISSUES

Fair Value Option

Companies have the option to report most financial
instruments at fair value, with all gains and losses related to
changes in fair value reported in the income statement.
 Applied on an instrument-by-instrument basis.

 Generally available only at the time a company first

purchases the financial asset or incurs a financial liability.

 Company must measure this instrument at fair value until

the company no longer has ownership.

17-60 LO 4
 Fair Value Option

Available-for-Sale Debt Securities

Illustration: McCollum Company purchases stock in Fielder
Company during 2017 that it classifies as available-for-sale. At
December 31, 2017, the cost of this security is $100,000; its fair
value at December 31, 2017, is $125,000. If McCollum chooses
the fair value option to account for the Fielder Company stock, it
makes the following entry at December 31, 2017.

Equity Investments 25,000

Unrealized Holding Gain or Loss—Income 25,000

17-61 LO 4
 Fair Value Option

Equity Method Investments

Illustration: Sullivan Company holds a 28 percent stake in Suppan
Inc. Sullivan purchased the investment in 2017 for $930,000. At
December 31, 2017, the fair value of the investment is $900,000.
Sullivan elects to report the investment in Suppan using the fair
value option. The entry to record this investment is as follows.

Unrealized Holding Gain or Loss—Income 30,000

Equity Investments 30,000

17-62 LO 4
 EVOLVING ISSUE WHAT’S YOURCONTROVERSY
FAIR VALUE PRINCIPLE
As discussed in the opening story, the reporting of investment securities is
controversial. Some believe that all securities should be reported at fair value
with the unrealized gain or loss reported in net income. Others believe the
unrealized gain or loss should be reported in other comprehensive income. A
third group believes all debt securities should be stated at amortized cost, and
still others favor the present approach. Here are some of the major unresolved
issues:
• Measurement based on intent. Companies classify debt securities as held-
to-maturity, available-for-sale, or trading. As a result, companies can report
three identical debt securities in three different ways in the financial
statements. Some argue such treatment is confusing. Furthermore, the
held-to-maturity category relies on intent, a subjective evaluation. What is
not subjective is the fair value of the debt instrument. In other words, the
three classifications are subjective, resulting in arbitrary classifications.
• Gains trading. Companies can classify certain debt securities as held-to-
maturity and therefore report them at amortized cost. Companies can
classify other debt securities as available-for-sale and report them at fair
17-63 (continued) LO 4
 EVOLVING ISSUE WHAT’S YOURCONTROVERSY
FAIR VALUE PRINCIPLE
value, with the unrealized gain or loss reported as other comprehensive
income. In either case, a company can become involved in “gains trading” (also
referred to as “cherry picking,” “snacking,” or “sell the best and keep the rest”).
In gains trading, companies sell their “winners,” reporting the gains in income,
and hold on to the losers.
• Liabilities not fairly valued. Many argue that if companies report investment
securities at fair value, they also should report liabilities at fair value. Why?
By recognizing changes in value on only one side of the balance sheet (the
asset side), a high degree of volatility can occur in the income and
stockholders’ equity amounts. Further, financial institutions are involved in
asset and liability management (not just asset management). Viewing only
one side may lead managers to make uneconomic decisions as a result of
the accounting. The fair value option may address this concern to some
extent. However, there is debate on the usefulness of fair value estimates
for liabilities.

17-64 LO 4
 OTHER FINANCIAL REPORTING ISSUES

Impairment of Value
The rules for debt investments (debt securities and loans)
reported at amortized cost follow the same approach as
discussed in Chapter 7. That is, companies should use the
current expected credit loss model to record the impairment
of debt investments similar to receivables.

17-65 LO 4
 Impairment of Value

Illustration: Strickler Company holds held-to-maturity bond

securities with a par value and amortized cost of $1 million. The
fair value of these securities is $800,000. In evaluating the
securities, Strickler now determines that it is probable that it will
not collect all amounts due. In this case, it reports a Loss on
Impairment of $200,000. Strickler includes this amount in income
and records the impairment as follows.

Loss on Impairment 200,000

Debt Investments 200,000

17-66 LO 4
 COPYRIGHT

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17-67