Fisher Corporation invested $320,000 cash in available-for-sale marketable securities in early December.On December 31,the quoted market price for these securities is $337,000.Which of the following statements is correct?

Question

Quizplus · Accepted Answer

The correct statement is that Fisher's December 31 balance sheet reports marketable securities at $337,000 and an unrealized holding gain on investments of $17,000. This is because available-for-sale marketable securities are reported on the balance sheet at fair value, which in this case is the quoted market price of $337,000 on December 31. The unrealized holding gain of $17,000 is reported as a component of other comprehensive income on the balance sheet. The gain is not recognized on the income statement until the securities are sold. Therefore, statement A is incorrect. Statement B is also incorrect because if Fisher sells the securities for $300,000, it will report a loss of $20,000 ($320,000 cost - $300,000 sales price), not $37,000. Statement C is incorrect because the balance sheet should report the securities at fair value, which is $337,000, not their cost of $320,000.

Fisher Corporation Invested $320,000 Cash in Available-For-Sale Marketable Securities in Early