a. Some of Quinghai Lake Limited’s investment securities are classified as trading securities and some are classified as non-trading. The cost and fair value of each category at December 31, 2020, were as follows.

At December 31, 2019, the Fair Value Adjustment—Trading account had a debit balance of ¥2,200, and the Fair Value Adjustment—Non-Trading account had a credit balance of ¥7,750. Prepare the required journal entries for each group of securities for December 31, 2020.

b. Identify where each of the following items would be reported in the financial statements.
1. Loss on sale of investments in shares.
2. Unrealized gain on non-trading securities.
3. Fair value adjustment—trading.
4. Interest earned on investments in bonds.
5. Unrealized loss on trading securities.

Use the following possible categories:
Statement of financial position:
        Intangible assets .......................................................................Equity
        Property, plant, and equipment ...................Non-current liabilities
        Investments ............................................................Current liabilities
        Current assets
Income statement:
        Other income and expense
Comprehensive income statement:
        Other comprehensive income

Transcribed Image Text:

Cost Unrealized Gain (Loss) Fair Value |Trading securities Non-trading securities ¥84,900 ¥96,000 ¥(11,100) ¥ 4,100 ¥59,100 ¥63,200