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- Why are unrealized gains and losses on available-for-sale securities not reported in theincome statement, but instead are reported in other comprehensive income, and thenshown in accumulated other comprehensive income (AOCI) in the balance sheet?Unrealized holding gains and losses on debt securities classified as available for sale would have the following effects on accumulated other comprehensive income:a) Gains: Increase, Losses: Increaseb) Gains: Decrease, Losses: Decreasec) Gains: Decrease, Losses: Increased) Gains: Increase, Losses: DecreaseWhich of the following is NOT correct regarding trading securities * a. Unrealized holding gains or losses are reported in profit or loss b. Share in profit of the investee increases carrying value of the investment c. These are classified as current assets. d. Cash dividends shall be recognized as dividend income
- For investments in available-for-sale securities, a debit balance in the Unrealized Holding Gain/Loss account reflects a cumulative unrealized gain. is reported as a negative element in the accumulated other comprehensive income section of shareholders' equity. is reported as a positive element in the accumulated other comprehensive income section of shareholders' equity. is reported as a positive element in the assets section of the balance sheet.For fi nancial assets classifi ed as trading securities, how are unrealized gains and losses refl ected in shareholders’ equity? C . Th ey are a component of accumulated other comprehensive income.Where are changes in fair value for available for sale securities reported? Group of answer choices as a prior period adjustment to retained earnings on the balance sheet as a component of accumulated other comprehensive income on the balance sheet as operating income or loss on the income statement as income or loss from peripheral activities on the income statement
- Changes in the fair value of held to maturity securities are: A. not recognized. B. recognized on the income statement and as part of stockholders' equity. C. reported as part of stockholders' equity. D. recognized on the income statement.When the market value of a company’s portfolio of available-for-sale securities is lower than its cost,the difference should be: a. accounted for as a valuation allowance deducted from the asset to which it relates b. accounted for as an addition in the shareholders’ equity section of the balance sheet c. accounted for as a liability d. disclosed and described in a note to the financial statements but not accounted for.List of Accounts Cash Debt Investments Dividend Revenue Fair Value Adjustment-Available-for-Sale Fair Value Adjustment-Stock Fair Value Adjustment-Trading Gain on Sale of Debt Investments Gain on Sale of Stock Investments Interest Receivable Interest Revenue Loss on Sale of Debt Investments Loss on Sale of Stock Investments No Entry Revenue from Stock Investments Short-Term Investments Stock Investments Unrealized Gain or Loss-Equity Unrealized Gain or Loss-Income
- When holding available-for-sale securities, a company should disclose for each income statement period gross realized gains and losses as a separate component of other comprehensive income. unrealized gains and losses included in net income. proceeds from sales and the gross realized gains and losses on those sales. none of these choices.For fi nancial assets classifi ed as trading securities, how are unrealized gains and lossesrefl ected in shareholders’ equity?A . Th ey are not recognized.6. Unrealized gains and losses on investments in trading securities are reported a. as a current assetb. on the income statementc. on the balance sheet as part of stockholders' equityd. as a contra asset