Kuhn Corp.began operations in 2011.An analysis of Kuhn's equity securities portfolio acquired in 2011 shows the following totals at December 31, 2011.Kuhn accounts for these investments under the fair value through net income model What amount should Kuhn report in its 2011 income statement for loss on investment?

Question

Kuhn Corp.began operations in 2011.An analysis of Kuhn's equity securities portfolio acquired in 2011 shows the following totals at December 31, 2011.Kuhn accounts for these investments under the fair value through net income model  What amount should Kuhn report in its 2011 income statement for loss on investment?

Quizplus · Accepted Answer

To calculate the loss on investment, 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 is $53,000, and their cost is $71,000, resulting in a loss of $18,000 ($53,000 - $71,000 = -$18,000). Since Kuhn accounts for these investments under the fair value through net income model, the loss is recognized in the income statement. Therefore, Kuhn should report a $18,000 loss on investment in its 2011 income statement.

Kuhn CorpBegan Operations in 2011