Investments in equity securities with insignificant influence were purchased for $400,000,and had a fair value of $410,000 at the end of the year.The adjusting entry to record this difference includes a credit to:
A)Retained Earnings.
B)Unrealized Gain on Equity Securities.
C)Investment in Equity Securities.
D)Unrealized Loss on Equity Securities.

Question

Quizplus · Accepted Answer

The adjusting entry to record the increase in fair value of equity securities with insignificant influence is to credit the Unrealized Gain on Equity Securities account, as the company has not yet sold the securities and the gain is unrealized. Retained Earnings, Investment in Equity Securities, and Unrealized Loss on Equity Securities are not affected by this adjusting entry.

Investments in Equity Securities with Insignificant Influence Were Purchased for $400,000,and