A company's trading security has a fair value which exceeds its cost. When recording the journal entry:

Question

Quizplus · Accepted Answer

If the fair value of a trading security exceeds its cost, this means that the security has unrealized gains. The Unrealized Gain account should be credited to reflect the increase in the value of the investment. Therefore, option B is the correct answer. The Investment account would not be credited as this account is typically used to record the cost of the investment. Additionally, the Unrealized Loss account would not be debited as there is no loss to record.

A Company's Trading Security Has a Fair Value Which Exceeds