Cabe Entity purchased equity instruments on 3/1/20X7 for $645,000 and classified them as at FVTOCI. On...

Cabe Entity purchased equity instruments on 3/1/20X7 for $645,000 and classified them as at FVTOCI. On 12/31/20X7, the fair value of the equity instruments was $650,000. CE sold them on 1/1/20X8. Where is the unrealized gain on the instruments as of 12/31/X7 recorded? Describe what adjustments must be made when the equity instruments are sold.

Expert Solution

Journal entry when equity instrument is sold
Cash	650,000
Equity instrument		645,000
Increase in Fair value		5,000
(Equity instrument sold)
Increase in Fair value	5,000
FVOCI		5,000
(Gain recoreded in OCI)

So the unrealized gain will be recorded on Other comprehensive income(OCI)
Adjustments made are shown above

ekkarill92 answered 1 year ago

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