On January 1,Jewel Company buys $200,000 of Marcelo Corp.12%,36-month notes.Interest is paid on the last day of each month.The notes are classified as available-for-sale securities.This is the company's first and only investment in available-for-sale securities.On December 31,the notes have a fair value of $204,000.The amount that Jewel Company should report in the equity section of its year-end December 31 balance sheet for its investment in Marcelo Corp.is:

Question

Quizplus · Accepted Answer

The available-for-sale securities are reported at their fair value, and any unrealized gains or losses are recorded in the equity section of the balance sheet. Since the fair value of the notes increased from $200,000 to $204,000, Jewel Company has an unrealized gain of $4,000, which should be reported in the equity section of the balance sheet. Since there was no sale of the investment during the year, there is no realized gain or loss to report. Therefore, the correct answer is option D.

On January 1,Jewel Company Buys $200,000 of Marcelo Corp