On March 1,2012,a not-for-profit organization received a donation of securities worth $4,500.When it prepared its financial statements at December 31,2012,the securities had a fair value of $5,200.When it sold the securities on June 30,2013,it received $4,600.The entity's accounting procedures call for reporting all unrealized and realized gains and losses in a single account.How should it report its gains and losses in 2012 and 2013?

Question

Quizplus · Accepted Answer

The not-for-profit organization should report a gain of $700 in 2012 since the fair value of the securities increased from $4,500 to $5,200. Then, in 2013, they should report a loss of $600 since they sold the securities for $4,600 which is below the fair value of $5,200 at the end of 2012. Therefore, the correct answer is (C) a gain of $700 in 2012 and a loss of $600 in 2013.

On March 1,2012,a Not-For-Profit Organization Received a Donation of Securities