On May 15,Briar Company purchased 10,000 shares of Broder Corp.for $80,000 for its available-for-sale securities portfolio.On September 30,the stock had a market value of $85,000.The $5,000 difference must be reported on the income statement as a $5,000 gain.

Question

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The $5,000 difference in market value is not recognized in the income statement for available-for-sale securities. Instead, it is reported as a component of comprehensive income in the equity section of the balance sheet. The unrealized gain or loss is not realized until the security is sold, at which point it would be recognized in the income statement.

On May 15,Briar Company Purchased 10,000 Shares of Broder Corp