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On October 12,2017,Neptune Corporation invested $700,000 in short-term available-for-sale marketable securities.The market value of this investment was $730,000 at December 31,2017,but had slipped to $725,000 by December 31,2018.
-In financial statements prepared on December 31,2017,Neptune Corporation reports:
A)The asset Investments in Marketable Securities at $700,000 with footnote disclosure of the market value of $730,000.
B)The asset Investments in Marketable Securities at $730,000,and a $30,000 Unrealized Holding Gain included in total stockholders' equity.
C)The asset Investments in Marketable Securities at $730,000,and a $30,000 gain recognized in the income statement.
D)The asset Investments in Marketable Securities at $700,000,and a $30,000 Unrealized Holding Gain included in total stockholders' equity.

Question

Quizplus · Accepted Answer

For available-for-sale marketable securities, unrealized gains or losses are reported in other comprehensive income and reflected in the equity section of the balance sheet. Therefore, the asset is reported at its fair market value of $730,000, and the $30,000 unrealized gain is included in stockholders' equity, not recognized in the income statement.

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