As of 12/31/17,XYZ Inc.had Available-for-Sale debt investments with a fair value of $522,000,an amortized cost of $535,000,and a debit balance in the Fair Value Adjustment - Available for Sale Debt Investments account of $7,500.What is the amount of gain or loss reported by XYZ related to these available-for-sale debt investments and how should it be reported?

Question

Quizplus · Accepted Answer

The fair value of the available-for-sale debt investments is less than the amortized cost, resulting in an unrealized loss. The amount of the unrealized loss is $20,500 ($535,000 - $522,000). Since these investments are classified as available-for-sale, the unrealized loss should be reported as part of other comprehensive income. Therefore, the correct answer is C: Unrealized Loss of $20,500, reported as part of Other Comprehensive Income.