Carpark Services began operations in 20X1 and maintains long-term investments in available-for-sale debt securities. The year-end cost
Question:
Carpark Services began operations in 20X1 and maintains long-term investments in available-for-sale debt securities. The year-end cost and fair values for its portfolio of these debt securities follows. The year-end adjusting entry to record the unrealized gain/loss at December 31, 20X1 is:
| Available-for-Sale Securities | Cost | Fair Value | |||
| December 31, 20X1 | $ | 275,000 | $ | 261,000 | |
| December 31, 20X2 | $ | 360,000 | $ | 376,000 | |
Multiple Choice
A. Debit Unrealized Gain – Equity $14,000; Credit Fair Value Adjustment – Available-for-Sale (LT) $14,000.
B. Debit Unrealized Loss – Equity $14,000; Credit Fair Value Adjustment – Available-for-Sale (LT) $14,000.
C. Debit Realized Loss – Income $14,000; Credit Fair Value Adjustment – Available-for-Sale (ST) $14,000.
D. Debit Fair Value Adjustment – Available-for-Sale (LT) $14,000; Credit Unrealized Loss – Equity $14,000.
E. Debit Fair Value Adjustment – Available-for-Sale (LT) $14,000; Credit Unrealized Gain – Equity $14,000.
Expert Answer:
