Asked by
Miracle Gonzales
on Oct 28, 2024
Verified
When accounting for investments in trading securities,any decline in fair value below the cost of the investments is reported in which of the following ways?
A) On the income statement as a realized loss.
B) On the income statement as an unrealized holding loss.
C) On the balance sheet as a realized loss.
D) On the balance sheet as an unrealized holding loss in the stockholders' equity section.
Trading Securities
Financial securities purchased by a company, not intended for long-term investment but rather for making a profit in the near term from their sale or trade.
Unrealized Holding Loss
A decrease in the value of an investment that has not yet been sold for cash.
Income Statement
A financial report that shows a company's revenues, expenses, and net income over a specific period.
- Quantify and log the unrealized gains and losses encountered in investments.
- Describe the differences between trading, available-for-sale, and held-to-maturity securities and understand their impacts on financial reporting.
Verified Answer
4M
Learning Objectives
- Quantify and log the unrealized gains and losses encountered in investments.
- Describe the differences between trading, available-for-sale, and held-to-maturity securities and understand their impacts on financial reporting.