Assuming Neptune does not sell this investment,the financial statements prepared at December 31,2018 will report:
A)Investments in Marketable Securities of $700,000,reduced by a $30,000 Unrealized Holding Gain on Investments,in the asset section of the balance sheet.
B)The asset Investments in Marketable Securities of $700,000 in the balance sheet,and a $25,000 Unrealized Holding Loss on Investments in the income statement.
C)The asset Investments in Marketable Securities of $725,000,and a $5,000 Unrealized Holding Loss deducted from total stockholders' equity.
D)Investment in Marketable Securities of $725,000 in the asset section of the balance sheet,with a $25,000 Unrealized Holding Gain on Investments included in the stockholders' equity section.

Question

Quizplus · Accepted Answer

The correct answer is D because under accounting standards, unrealized gains (or losses) on available-for-sale securities are reported in the equity section of the balance sheet as a part of other comprehensive income, not in the income statement. The investment is reported at its fair value, which is $725,000 in this case.

Assuming Neptune Does Not Sell This Investment,the Financial Statements Prepared