Exercise 17-18Sheffield Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $766,000, an amortized cost of $766,000, and a fair value of $688,000. The company believes that impairment accounting is now appropriate for these bonds.Prepare the journal entry to recognize the impairment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)Account Titles and ExplanationDebitCredit(To record the impairment.)SHOW LIST OF ACCOUNTSLINK TO TEXTWhat is the new cost basis of the municipal bonds?New cost basis of the municipal bonds$Given that the maturity value of the bonds is $766,000, should Sheffield Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?NoYesSHOW LIST OF ACCOUNTSLINK TO TEXTAt December 31, 2018, the fair value of the municipal bonds is $724,000. Prepare the entry (if any) to record this information. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)Account Titles and ExplanationDebitCreditClick if you would like to Show Work for this question:Open Show Work
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