Use the following information to answer the following questions:

On January 1, 2019, a company's balance sheet reports its investments in debt securities as follows:

Assets
Investments in trading securities	$160,000
Investment in AFS securities	$100,000
Investments in HTM securities	$207,644
Equity
Accumulated other comprehensive income:
Unrealized gains (losses) on AFS securities	$4,000

Additional information:

a. The HTM securities are $200,000 face value securities purchased on January 1, 2017, at a yield of 4%. THe securities have a 4-year total life and pay interest annually on December 31, at a coupon rate of 6%.

b. The trading securities on hand on January 1 were sold in 2019 for $180,000.

c. More trading securities were purchased for $100,000. They are still on hand at December 31, 2019, and have a fair value of $125,000.

d. AFS securities, originally purchased for $26,000 with a carrying value of $25,000 as of January 1, 2019, were sold for $29,000.

e. AFS securities on hand at December 31, 2019, have a fair value of $81,000.

Required:

1. The gain on AFS securities reported on the 2019 income statement is:

a. $3,000

b. $4,000

c. $9,000

d. $10,000

2. What is the amount of the net gain related to AFS securities reported in 2019 other comprehensive income?

a. $1,000

b. $5,000

c. $6,000

d. $7,000

Answer rating: 100% (QA)

2 Carrying value of AFS at Jan 01 ... View the full answer