Summarize the amounts that wilson reports in income

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Reference no: EM131792173

Question: On January 1, 2014, Wilson Corporation acquired mortgage-backed securities (MBS) from National Financial for $10,000 and classified the investment in its available-for-sale (AFS) portfolio. On December 31, 2014, the MBS's fair value had declined to $7,000, and this decline was considered an other-than-temporary impairment. The $3,000 impairment during 2014 was attributed to:

• Credit losses-$1,000

• Other factors-$2,000 On December 31, 2015, the MBS's fair value recovered to $9,000. The $2,000 increase during 2015 was attributed to:

• Credit losses-$750

• Other factors-$1,250

Required: 1. Assume that Wilson follows U.S. GAAP. Prepare the journal entries to record:

• The January 1, 2014, purchase

• The December 31, 2014, impairment

• The December 31, 2015, impairment recovery Summarize the amounts that Wilson reports in income and other comprehensive income (OCI) during 2014 and 2015.

2. Repeat requirement 1 assuming Wilson follows IFRS.

3. Now assume that the MBS's value recovered to $11,000 on December 31, 2015. Explain how the $4,000 increase during 2015 will be allocated to income and OCI under (a) U.S. GAAP and (b) IFRS.

Reference no: EM131792173

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