A realized gain on temporary investments:
A)occurs when the investment increases in price and the company still holds it.
B)is the difference between the selling price of the investment and its original purchase price.
C)is the difference between the selling price of the investment and the most recent carrying value of the investment when the investment is sold.
D)occurs when the investment recovers in price to their original cost if a loss was previously recorded.

Question

Quizplus · Accepted Answer

A realized gain on temporary investments is the amount by which the selling price of the investment exceeds its most recent carrying value when the investment is sold. This means that the company has already recorded the investment at a certain value on its balance sheet, and if the investment is sold for more than this recorded value, the company has made a gain. Option A refers to an unrealized gain, Option B refers to the total gain (realized and unrealized), and Option D refers to a recovery of a previously recorded loss.

A Realized Gain on Temporary Investments