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PM Distributors Began Year 2 with Equity Investments of $8,100

Question 68

Multiple Choice

PM Distributors began Year 2 with Equity Investments of $8,100 (which consisted of a single investment) as well as a debit balance of $1,000 in the Fair Value Adjustment - Equity Investments account. PM does not have significant influence over the investee, and the investment has a readily determinable fair value. This trading security was sold for $9,100 during Year 2. How much was the gain or loss for the sale of this investments and how is it recorded?


A) No gain or loss reported, as the investment was sold for the adjusted fair value
B) Unrealized Gain of $1,000, reported as part of Other Comprehensive Income
C) Realized Loss of $1,000, reported as part of Net Income
D) Realized Gain of $1,000, reported as part of Net Income

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