Brandy Corporation's trading portfolio at the end of the year is as follows: At the end of the year, Brandy Corporation should

Question

Brandy Corporation's trading portfolio at the end of the year is as follows:  At the end of the year, Brandy Corporation should

Quizplus · Accepted Answer

Brandy Corporation should set up a Fair Value Adjustment account for the portfolio since there are multiple stocks in the portfolio that have unrealized gains and losses. Setting up a separate account to record these adjustments will allow for better tracking and management of the portfolio. Option A is incorrect because there is no indication that Stock D specifically needs a fair value adjustment. Option C is incorrect because an unrealized gain or loss should be recorded in the Fair Value Adjustment account, not recognized as income. Option D is incorrect because the loss is unrealized and should not be recognized on the income statement until the assets are actually sold.

Brandy Corporation's Trading Portfolio at the End of the Year