At December 31, 2010, the trading securities for Mayfair, Inc. are as follows: Mayfair should report the following amount related to the securities in its 2010 income statement:

Question

At December 31, 2010, the trading securities for Mayfair, Inc. are as follows:  Mayfair should report the following amount related to the securities in its 2010 income statement:

Quizplus · Accepted Answer

The unrealized loss on the trading securities is calculated as the difference between the fair value at the balance sheet date (December 31, 2010) and the cost. In this case, the fair value is $18,000 ($14,000 + $4,000) and the cost is $30,000, resulting in an unrealized loss of $12,000. Since this is an unrealized loss, it is reported on the income statement as a component of comprehensive income, not as a realized loss. The $2,000 gain is not relevant as it relates to a different set of securities.

At December 31, 2010, the Trading Securities for Mayfair, Inc