An unrealized loss account on available-for-sale securities is
A) reported under Other Expenses and Losses in the income statement.
B) closed-out at the end of the accounting period.
C) reported as a separate component of stockholders' equity.
D) deducted from the cost of the investment.

Question

Quizplus · Accepted Answer

An unrealized loss account on available-for-sale securities is reported as a separate component of stockholders' equity. This is because available-for-sale securities are not intended to be held for a short-term gain and any change in fair value is recorded directly to the equity section of the balance sheet. It is not reported as an expense on the income statement, closed-out at the end of the accounting period, or deducted from the cost of the investment.

An Unrealized Loss Account on Available-For-Sale Securities Is