If the cost of an available-for-sale security exceeds its fair value by $29,000, the entry to recognize the loss
A)is not required since the share prices will likely rebound in the long run.
B)will show a debit to an expense account.
C)will show a credit to a valuation allowance account that appears in the stockholders' equity section of the balance sheet.
D)will show a debit to an unrealized gain or loss account that is deducted in the stockholders' equity section of the balance sheet.

Question

Quizplus · Accepted Answer

Unrealized losses on available-for-sale securities are recorded in the stockholders' equity section as a debit to an unrealized gain or loss account, reflecting the decrease in fair value.

If the Cost of an Available-For-Sale Security Exceeds Its Fair