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Q1. Calvin Corp. holds Mud Co. bonds as an investment. On 1/1/2017, the bond investment had a fair market value of $5,000 and an amortized cost of $5,000. On 12/31/2017, the SEC reports that Mud has admitted to "fraudulent accounting practices." On that day, the fair value of the bond investment falls to $4,200. The 12/31/2017 event is viewed as and accounted for as an impairment event. On 12/31/2018, the fair market value has recovered to $5,100. A. Assume the investment is classified as HTM. Make all journal entries on 12/31/2017 and 12/31/2018 related to the impairment and subsequent increase in fair value. Date entries and show any calculations and explanations. If no entry is needed on one or both dates, explain why. Your account titles should indicate clearly whether any recognized gains or losses are reported in NI or OCI. Date Accounts Dr CY 12/31/2017 12/31/2018 B. Assume the investment is classified as AFS. The ECL for the bond investment on 12/31/2017 is $700 and the ECL on 12/31/2018 is $300. Make necessary journal entries in good form. Date entries and show any calculations and explanations. If no entry is needed on one or both dates, explain why. Also, your account titles should indicate clearly whether any recognized gains or losses are reported in NI or OCI. Accounts 12/31/2017 12/31/2018

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