Pan Inc. has an investment in available-for-sale securities of $70000. This investment experienced an unrealized loss of $6000 during the current year. Assuming a 35% tax rate the effect of this loss on comprehensive income will be
A) no effect.
B) $70000 increase.
C) $24500 decrease.
D) $6000 decrease.

Question

Quizplus · Accepted Answer

The unrealized loss of $6000 on available-for-sale securities affects comprehensive income directly by reducing it by the amount of the loss. Tax effects are not considered in the calculation of the unrealized gain or loss itself on comprehensive income.

Pan Inc Has an Investment in Available-For-Sale Securities of $70000