Information concerning Manley Company's portfolio of debt securities at May 31, Year 6, and May 31, Year 7, is presented below.All of the debt securities were purchased by Manley during June, Year 5.Prior to June, Year 5, Manley had no investments in debt or equity securities.
$\begin{array}{llc}\text { As of May } 31, \text { Year } 6 & \text { Amortized Cost } &\text { Fair Value }\\hline
\text { CZ Company bonds } & \$ 164,526 & \$ 168,300 \
\text { Jerry Industry bonds } & 204,964 & 205,200 \
\text { Barley Inc. bonds } & 305,785 & 285,200 \
\hline&\$675,275&\$658,700\\
\text { As of May } 31, \text { Year } 7 & \text { Amortized Cost } &\text { Fair Value }\\hline\text { CZ Company bonds } & \$ 152,565 & \$ 147,600 \
\text { Jerry Industry bonds } & 193,800 & 204,500 \
\text { Barlev Inc. bonds } & 289,130 & 291,400\&\$635,495&\$643,500
\end{array}$ (CMA adapted, Jun 97 #11) Refer to the Manley Company example.Assuming that the above securities are properly classified as available-for-sale securities under U.S.GAAP, the unrealized holding gain or loss as of May 31, Year 7, would be

Question

Quizplus · Accepted Answer

For available-for-sale securities under U.S. GAAP, unrealized holding gains or losses are not recognized in the income statement but are reported as a separate component of shareholders' equity under other comprehensive income. The unrealized holding gain as of May 31, Year 7, is calculated as the difference between the fair value ($643,500) and the amortized cost ($635,495) of the securities, which equals $8,005.

Information Concerning Manley Company's Portfolio of Debt Securities at May