On August 31,2014,Steinway Company purchased the following available-for-sale securities:

On December 31,2014,Steinway reclassified its investment in security I from available-for-sale securities to trading securities.What total amount of loss on these securities should be included in Steinway' income statement for the year ended December 31,2014?

Question

On August 31,2014,Steinway Company purchased the following available-for-sale securities:

On December 31,2014,Steinway reclassified its investment in security I from available-for-sale securities to trading securities.What total amount of loss on these securities should be included in Steinway' income statement for the year ended December 31,2014?

Quizplus · Accepted Answer

Since security I was reclassified from available-for-sale to trading securities, any unrealized gain or loss on this security must be included in the income statement. As of December 31, 2014, the fair value of security I was $200,000, which is $16,000 less than its cost of $216,000. Therefore, the total amount of loss on these securities that should be included in Steinway's income statement for the year ended December 31, 2014, is $16,000. The other securities are not relevant to this calculation since they were not reclassified.

On August 31,2014,Steinway Company Purchased the Following Available-For-Sale Securities