At the end of the first year of operations the total cost of the trading securities portfolio is $245000. Total fair value is $250000. The financial statements should show
A) an addition to an asset of $5000 and a realized gain of $5000.
B) an addition to an asset of $5000 and an unrealized gain of $5000 in the stockholders' equity section.
C) an addition to an asset of $5000 in the current assets section and an unrealized gain of $5000 in "Other revenues and gains."
D) an addition to an asset of $5000 in the current assets section and a realized gain of $5000 in "Other revenues and gains."

Question

Quizplus · Accepted Answer

Trading securities are reported at fair value, and unrealized gains or losses are recognized in the income statement. The increase in fair value of $5,000 should be shown as an addition to the asset and an unrealized gain in "Other revenues and gains."

At the End of the First Year of Operations the Total