Management can sell securities with unrealized holding gains (or losses) and transfer through net income to Retained Earnings the entire unrealized holding gain (or loss)-that is, management can affect the timing of gain or loss recognition in net income for both securities available-for-sale and trading securities.

Question

Quizplus · Accepted Answer

Management can only affect the timing of gain or loss recognition in net income for trading securities, not for available-for-sale securities, as unrealized gains or losses for available-for-sale securities are reported in other comprehensive income, not net income.

Management Can Sell Securities with Unrealized Holding Gains (Or Losses)