An investment, which was purchased for $400,000 and classified as an available-for-sale security, has a fair value of $420,000 at the end of the year. The year-end journal entry will have a credit to:

Question

Quizplus · Accepted Answer

The increase in fair value of an available-for-sale security is recorded as an unrealized gain, which is credited to "Unrealized Gain on Investment in Available-for-Sale Securities" in other comprehensive income, not directly affecting retained earnings or recognizing a sale.

An Investment, Which Was Purchased for $400,000 and Classified as an Available-For-Sale