Question

In: Accounting

Changes in valuation for trading securities are reported as _____. unrealized gains or losses on the...

Changes in valuation for trading securities are reported as _____.

  1. unrealized gains or losses on the income statement under Other Income (Loss)
  2. accumulated unrealized gain or loss in the stockholders' equity section of the balance sheet
  3. an amortized cost of the investment on the balance sheet
  4. None of these choices are correct.

Changes in valuation for available-for-sale securities are reported as _____.

  1. unrealized gains or losses on the income statement under Other Income (Loss)
  2. accumulated unrealized gain or loss in the stockholders' equity section of the balance sheet
  3. an amortized cost of the investment on the balance sheet
  4. None of these choices are correct.

Solutions

Expert Solution

1) Change in valuation for trading securities are reported as :

Option A is correct answer.

Reason: Trading securities are purchased and sold to earn short term profits from changes in market prices.

2) Change in valuation for available for sale securities are reported as :

Option B is the correct answer.

Reason: Because available for sale securities are neither held for trading, held for maturity nor held for strategic reasons.

ekkarill92 answered 2 years ago
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