On January 1,2016,Everglade Company purchased the following securities and properly accounted for them as securities available for sale:

All declines in value are considered temporary.What amount should the Everglade Company report relative to these securities in its 2016 statement of other comprehensive income?

Question

On January 1,2016,Everglade Company purchased the following securities and properly accounted for them as securities available for sale:

All declines in value are considered temporary.What amount should the Everglade Company report relative to these securities in its 2016 statement of other comprehensive income?

Quizplus · Accepted Answer

Since all declines in value are considered temporary, we only need to consider the net unrealized gain. The calculation for this would be the sum of the fair values of the securities at year-end ($140,000 + $55,000) less their cost ($183,000), which equals $12,000 net unrealized gain. Therefore, the answer is choice C: $12,000 net unrealized gain.

On January 1,2016,Everglade Company Purchased the Following Securities and Properly