An investor in trading securities has the following information available at December 31,2012:
Market value of trading securities $\quad \$8,000$
Acquisition cost of trading securities $\quad \$9,000$
How does the investor report the change in market value on the trading securities at December 31,2012?
A) unrealized loss of $1,000 on income statement
B) unrealized gain of $1,000 on income statement
C) $1,000 is added to other comprehensive income account on the balance sheet
D) $1,000 is subtracted from the other comprehensive income account on the balance sheet

Question

Quizplus · Accepted Answer

Trading securities are reported at fair market value, with unrealized gains and losses included in earnings. Since the market value is $1,000 less than the acquisition cost, it is reported as an unrealized loss of $1,000 on the income statement.

An Investor in Trading Securities Has the Following Information Available $8,000\quad \$8,000$8,000

An Investor in Trading Securities Has the Following Information Available $\quad \$8,000$