Business, 03.03.2020 20:30 mel4245

Melrose Company has an investment in bonds issued by Roscoe Industries that are classified as available-for-sale securities. The bonds were purchased at par. On December 31, Year 2, the Investment in Roscoe bonds account had a debit balance of $200,000, representing its amortized cost, and its Fair value adjustment account had a credit balance of $5,000. On December 31, Year 3, the amortized cost of those bonds had not changed, but the fair value of those bonds was $225,000. Which of the following will be included in the related journal entry dated December 31, Year 3?
a. Debit to Fair value adjustment for $20,000
b. Credit to Fair value adjustment for $20,000
c. Debit to Fair value adjustment for $30,000
d. Credit to Fair value adjustment for $30,000

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