Thanks for your suggestions. Here is the working code:

package com.example.passwordsafe.data;

import com.example.passwordsafe.core.usecases.EncryptionModuleInterface;

import javax.crypto.*;
import javax.crypto.spec.IvParameterSpec;
import javax.crypto.spec.PBEKeySpec;
import javax.crypto.spec.SecretKeySpec;
import java.security.InvalidAlgorithmParameterException;
import java.security.InvalidKeyException;
import java.security.NoSuchAlgorithmException;
import java.security.SecureRandom;
import java.security.spec.InvalidKeySpecException;
import java.security.spec.KeySpec;
import java.util.Base64;

public class AESEncryption implements EncryptionModuleInterface {
    private static final int ITERATION_COUNT = 1000000;
    private static final int KEY_LENGTH = 256;
    private static final String PBKDF_ALGORITHM = "PBKDF2WithHmacSHA1";
    private static final String TRANSFORMATION = "AES/CBC/PKCS5Padding";
    private static final String ALGORITHM = "AES";

    @Override
    public String encryptPassword(String password, String masterpassword) {
        byte[] finalCiphertext;

        SecureRandom random = new SecureRandom();
        byte[] salt = new byte[16];
        random.nextBytes(salt);

        KeySpec spec = new PBEKeySpec(masterpassword.toCharArray(), salt, ITERATION_COUNT, KEY_LENGTH);

        try {
            SecretKeyFactory factory = SecretKeyFactory.getInstance(PBKDF_ALGORITHM);
            byte[] key = factory.generateSecret(spec).getEncoded();
            SecretKeySpec keySpec = new SecretKeySpec(key, ALGORITHM);

            byte[] ivBytes = new byte[16];
            random.nextBytes(ivBytes);
            IvParameterSpec iv = new IvParameterSpec(ivBytes);

            Cipher cipher = Cipher.getInstance(TRANSFORMATION);
            cipher.init(Cipher.ENCRYPT_MODE, keySpec, iv);

            byte[] inputBytes = password.getBytes();

            byte[] encValue = cipher.doFinal(inputBytes);
            finalCiphertext = new byte[encValue.length+2*16];
            System.arraycopy(ivBytes, 0, finalCiphertext, 0, 16);
            System.arraycopy(salt, 0, finalCiphertext, 16, 16);
            System.arraycopy(encValue, 0, finalCiphertext, 32, encValue.length);

        } catch (NoSuchPaddingException | InvalidKeyException | InvalidAlgorithmParameterException |
                 InvalidKeySpecException | NoSuchAlgorithmException | IllegalBlockSizeException | BadPaddingException e) {
            throw new RuntimeException(e);
        }

        Base64.Encoder encoder = Base64.getEncoder();

        return encoder.encodeToString(finalCiphertext);
    }

    @Override
    public String decryptPassword(String password, String masterpassword) {
        byte[] ivBytes = new byte[16];
        byte[] salt = new byte[16];
        byte[] encValue;

        Base64.Decoder decoder = Base64.getDecoder();
        byte[] readEncryptedBytesWithIvAndSaltPrefix = decoder.decode(password);

        byte[] inputBytes = new byte[readEncryptedBytesWithIvAndSaltPrefix.length - 32];

        System.arraycopy(readEncryptedBytesWithIvAndSaltPrefix, 0, ivBytes, 0, 16);
        System.arraycopy(readEncryptedBytesWithIvAndSaltPrefix, 16, salt, 0, 16);
        System.arraycopy(readEncryptedBytesWithIvAndSaltPrefix, 32, inputBytes, 0, readEncryptedBytesWithIvAndSaltPrefix.length - 32);

        KeySpec spec = new PBEKeySpec(masterpassword.toCharArray(), salt, ITERATION_COUNT, KEY_LENGTH);

        try {
            SecretKeyFactory factory = SecretKeyFactory.getInstance(PBKDF_ALGORITHM);
            byte[] key = factory.generateSecret(spec).getEncoded();
            SecretKeySpec keySpec = new SecretKeySpec(key, ALGORITHM);

            IvParameterSpec iv = new IvParameterSpec(ivBytes);

            Cipher cipher = Cipher.getInstance(TRANSFORMATION);
            cipher.init(Cipher.DECRYPT_MODE, keySpec, iv);

            encValue = cipher.doFinal(inputBytes);

        } catch (NoSuchAlgorithmException | NoSuchPaddingException | InvalidKeyException | IllegalBlockSizeException |
                 BadPaddingException | InvalidKeySpecException | InvalidAlgorithmParameterException e) {
            throw new RuntimeException(e);
        }

        return new String(encValue);
    }
}