McGyer Limited invests its excess cash in short term investments. The following information is available about its investments at December 31, 2020: $$\begin{array} { | r | r | r | }
\hline & \text { Cost } & \text { Market } \
\hline \text { Investment 1 } & \$ 40,000 & \$ 36,000 \
\hline \text { Investment 2 } & 30,000 & 26,000 \
\hline \text { Investment 3 } & 80,000 & 84,000 \
\hline
\end{array}$$ If McGyer accounts for these at fair value through profit or loss investments, what is the amount of gain/loss to be recorded in fiscal 2020?

Question

McGyer Limited invests its excess cash in short term investments. The following information is available about its investments at December 31, 2020: $$\begin{array} { | r | r | r | } 
\hline & \text { Cost } & \text { Market } \
\hline \text { Investment 1 } & \$ 40,000 & \$ 36,000 \
\hline \text { Investment 2 } & 30,000 & 26,000 \
\hline \text { Investment 3 } & 80,000 & 84,000 \
\hline
\end{array}$$ If McGyer accounts for these at fair value through profit or loss investments, what is the amount of gain/loss to be recorded in fiscal 2020?

Quizplus · Accepted Answer

Under fair value through profit or loss, the investments are recorded at fair value, and any gains or losses are recognized in the income statement. In this case, Investment 1 has a loss of $4,000, and Investment 2 has a loss of $4,000, while Investment 3 has a gain of $4,000. Therefore, the net loss to be recorded is $4,000.

McGyer Limited Invests Its Excess Cash in Short Term Investments