An investor's available-for-sale securities had increased in market value from $50,000 to $55,000 as of the balance sheet date. Which of the following journal entries would be required?

Question

Quizplus · Accepted Answer

The increase in market value of available-for-sale securities represents an unrealized gain, which is not yet realized. Therefore, journal entry D, which includes an allowance to adjust investments to market and an unrealized gain on investments, is the correct entry. Option A and B are incorrect because the gain has not been realized, and option C is incorrect because it only includes an unrealized gain without the necessary allowance to adjust to market value.

An Investor's Available-For-Sale Securities Had Increased in Market Value from $50,000