Jack's by the Tracks. Has the following partial balance sheet: $\begin{array}{c}\text { JACK'S BY THE TRACKS }\
\text { Balance Sheet (partial)}\
\begin{array}{lr}
\text { Stockholders' Equity. }\
\text { Common Stock } & \$ 6,000,000 \
\text { Retained Earnings } & 2,000,000 \
\text { Total Paid-in capital and retained earnings } & 8,000,000 \
\text { Add: Unrealized gain on available-for-sale securities } & 800,000 \
\text { Total Stockholders' Equity: } & \$ 8,800,000
\end{array}\end{array}$ What effect will the unrealized gain on available-for-sale securities have on comprehensive income?
A) No effect on comprehensive income.
B) Increase of $800000 in comprehensive income.
C) Increase of $8800000 in comprehensive income.
D) Decrease of $800000 in comprehensive income.

Question

Quizplus · Accepted Answer

The unrealized gain on available-for-sale securities will be reported as a component of other comprehensive income and will increase comprehensive income by $800,000. This is because available-for-sale securities are reported at fair value and any changes in their value are reported as unrealized gains or losses in other comprehensive income until they are sold.

Jack's by the Tracks What Effect Will the Unrealized Gain on Available-For-Sale Securities Have