The Copper Company has a bond investment classified as held to maturity, which has a carrying value of $62, 000 and a fair value of $24, 000.The decline in value is considered as other than temporary.Copper should record the decline asA) Unrealized Loss on Value Decline 38 , 000 Allowance for Change in Value of Investment 38 , 000 \begin{array}{ll} ext { Unrealized Loss on Value Decline } & 38,000 \ ext { Allowance for Change in } & \ ext { Value of Investment } & 38,000\end{array} Unrealized Loss on Value Decline Allowance for Change in Value of Investment 38 , 000 38 , 000 B) Investment in Held-to-Maturity Debt Securities 38 , 000 Realized Loss on Decline in Value 38 , 000 \begin{array} { l } ext { Investment in Held-to-Maturity } \ ext { Debt Securities } \quad 38,000 \ ext { Realized Loss on Decline in Value } \quad 38,000 \\end{array} Investment in Held-to-Maturity Debt Securities 38 , 000 Realized Loss on Decline in Value 38 , 000 C) Realized Loss on Decline in Value 38 , 000 Investment in Held-to-Maturity Debt Securities 38 , 000 \begin{array}{ll} ext { Realized Loss on Decline in Value } & 38,000 \ ext { Investment in Held-to-Maturity } & \ ext { Debt Securities } & 38,000\end{array} Realized Loss on Decline in Value Investment in Held-to-Maturity Debt Securities 38 , 000 38 , 000 D) Unrealized Loss on Value Decline 38 , 000 Investment in Held-to-Maturity Debt Securities 38 , 000 \begin{array} { l r } ext { Unrealized Loss on Value Decline } & 38,000 \ ext { Investment in Held-to-Maturity } & \\quad ext { Debt Securities } & 38,000\end{array} Unrealized Loss on Value Decline Investment in Held-to-Maturity Debt Securities 38 , 000 38 , 000

Question

The Copper Company has a bond investment classified as held to maturity, which has a carrying value of $62, 000 and a fair value of $24, 000.The decline in value is considered as other than temporary.Copper should record the decline asA)  Unrealized Loss on Value Decline  38 , 000  Allowance for Change in   Value of Investment  38 , 000 \begin{array}{ll}	ext { Unrealized Loss on Value Decline }  &  38,000 \	ext { Allowance for Change in }  &  \	ext { Value of Investment }  &  38,000\end{array}  Unrealized Loss on Value Decline   Allowance for Change in   Value of Investment  ​ 38 , 000 38 , 000 ​ B)  Investment in Held-to-Maturity   Debt Securities  38 , 000  Realized Loss on Decline in Value  38 , 000 \begin{array} { l } 	ext { Investment in Held-to-Maturity } \	ext { Debt Securities } \quad 38,000 \	ext { Realized Loss on Decline in Value } \quad 38,000 \\end{array}  Investment in Held-to-Maturity   Debt Securities  38 , 000  Realized Loss on Decline in Value  38 , 000 ​ C)  Realized Loss on Decline in Value  38 , 000  Investment in Held-to-Maturity   Debt Securities  38 , 000 \begin{array}{ll}	ext { Realized Loss on Decline in Value }  &  38,000 \	ext { Investment in Held-to-Maturity }  &  \	ext { Debt Securities }  &  38,000\end{array}  Realized Loss on Decline in Value   Investment in Held-to-Maturity   Debt Securities  ​ 38 , 000 38 , 000 ​ D)  Unrealized Loss on Value Decline  38 , 000  Investment in Held-to-Maturity   Debt Securities  38 , 000 \begin{array} { l r } 	ext { Unrealized Loss on Value Decline }  &  38,000 \	ext { Investment in Held-to-Maturity }  &  \\quad 	ext { Debt Securities }  &  38,000\end{array}  Unrealized Loss on Value Decline   Investment in Held-to-Maturity   Debt Securities  ​ 38 , 000 38 , 000 ​

Firoozeh Vahidiy · Accepted Answer

Final Answer : C, Explanation :  For held-to-maturity securities, a decline in fair value below the carrying amount that is considered other than temporary is recognized in earnings, which means recording it as a realized loss. This is done by debiting a loss account and crediting the investment account to reflect the decrease in the investment's value.

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