In financial statements prepared on December 31, 2010, Neptune Corporation reports:

Question

Quizplus · Accepted Answer

Option B is the best choice because it reflects both the cost of the Investment in Marketable Securities ($730,000) and the unrealized holding gain ($30,000) which is included in the total stockholders' equity. This presentation is in compliance with generally accepted accounting principles (GAAP). Option A is only disclosing the market value of the investment without including the unrealized gain. Option C is incorrect because gains on investments are not recognized in the income statement until they are realized. Option D only reports the cost of the investment and does not include the unrealized gain in stockholders' equity.

In Financial Statements Prepared on December 31, 2010, Neptune Corporation