On December 31, Year 1 balance sheet, a company reported the following investments in equity securities:

Cost of $400,000

Fair Value of $420,000

At December 31, Year 2, the fair value of the securities was $430,000

Which amount should the company report on its Year 2 income statement as a result of the increase in fair value of the investments in Year 2?

• Realized gain of $10,000
• Unrealized gain of $10,000
• Realized gain of $30,000
• Unrealized gain of $30,000

Which statement describes the accounting treatment for the transfer of debt securities from available-for-sale to trading?

• The realized gain or loss at the date of transfer increases or decreases stockholders’ equity
• The unrealized gain or loss at the date of transfer is amortized over the remaining life of the securities
• The unrealized gain or loss at the date of transfer increases or decreases stockholders’ equity
• The realized gain or loss at the date of transfer is amortized over the remaining life of the securities

Answer rating: 100% (QA)

Answer 1 The correct option is B Explanation Step 1 Realized gain is the one which can be record... View the full answer