Tyler Company began operations in 2010. The company's trading securities portfolio, which did not change in composition during 2011, is as follows:

Ignoring income taxes, what amount should be reported as an unrealized loss on trading securities in Tyler's 2011 income statement?

Question

Tyler Company began operations in 2010. The company's trading securities portfolio, which did not change in composition during 2011, is as follows:

Ignoring income taxes, what amount should be reported as an unrealized loss on trading securities in Tyler's 2011 income statement?

Quizplus · Accepted Answer

To calculate the unrealized loss, we need to compare the fair value of the securities at the end of the year with their cost. 
The fair value of the securities on December 31, 2011, is $185,000 ($200,000 - $15,000). Therefore, the unrealized loss is $15,000 ($200,000 - $185,000), which should be reported on Tyler's 2011 income statement.

Tyler Company Began Operations in 2010