Nevill Corp invests in short term investments. The following information is available about its investments at December 31, 2012: If Nevill accounts for these as available-for-sale investments, what is the amount of gain/loss to be recorded in fiscal 2012 comprehensive income?

Question

Nevill Corp invests in short term investments. The following information is available about its investments at December 31, 2012:  If Nevill accounts for these as available-for-sale investments, what is the amount of gain/loss to be recorded in fiscal 2012 comprehensive income?

Quizplus · Accepted Answer

To calculate the gain or loss, we need to compare the fair value of the investments at the end of the year with their cost. The fair value of the investments is $22,000 ($16,000 + $6,000), and their cost is $26,000. Therefore, there is a loss of $4,000 ($22,000 - $26,000) that needs to be recorded in fiscal 2012 comprehensive income.

Nevill Corp Invests in Short Term Investments