During its first year of operations, Coffman Inc. purchased trading securities with excess cash for $50,000. Coffman Inc. expects it will sell the securities within the next year. At the end of the year, these securities had a market value of $61,500.
a. Show how the securities would be reported on Coffman Inc.’s year-end balance sheet.
b. Explain how the increase in fair value of the securities would be reported on Coffman Inc.’s income statement for the year.