Data for investments in shares classified as trading securities are presented in E12-10. Assume instead that the investments are classified as non-trading securities. They have the same cost and fair value. The securities are considered to be a long-term investment.

Instructions

(a) Prepare the adjusting entry at December 31, 2017, to report the securities at fair value.

(b) Show the statement of financial position presentation at December 31, 2017, after adjustment to fair value.

(c) E. Devonshire, a member of the board of directors, does not understand the reporting of the unrealized gains or losses. Write a letter to Ms. Devonshire explaining the reporting and the purposes that it serves.

Data From E12-10 

At December 31, 2017, the end of its first year of operations, the trading securities for Geneva, AG are as follows.

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Security Cost Fair Value CHF16,000 CHF17,500 A 14,000 B 12,500 23,000 19,000 CHF49,000 CHF53,000