The journal entry to record the sale of a long-term available-for-sale investment includes a Gain on Sale of Investment in Available-for-Sale Securities for $500.The income statement will report:

Question

Quizplus · Accepted Answer

The gain on sale of the investment in available-for-sale securities is recognized as a component of other income and gains on the income statement. Option A, other comprehensive income, is incorrect because gains and losses on available-for-sale investments are initially recognized in other comprehensive income but reclassified to the income statement upon sale. Option C, extraordinary gain, is incorrect because the gain is not unusual or infrequent in nature. Option D, accumulated other comprehensive income, is incorrect because this account is a balance sheet account that accumulates gains and losses on available-for-sale securities until they are reclassified to the income statement.

The Journal Entry to Record the Sale of a Long-Term