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E 17-6 - 6,000(b Securities Fair Value Adjustment—...

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Entries for Available-for-Sale and Trading Securities the following information is available for Kinney  Company at December 31, 2010, regarding its investments. (a) Prepare the adjusting entry (if any) for 2010, assuming the securities are classified as trading. (b) Prepare the adjusting entry (if any) for 2010, assuming the securities are classified as available for-sale. (c) Discuss how the amounts reported in the financial statements are affected by the entries in (a) and(b). Answer: (a)  Securities Fair Value Adjustment Trading .............  6,000                         Unrealized Holding Gain or Loss Income ...................
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Unformatted text preview: 6,000 (b) Securities Fair Value Adjustment— Available-for-Sale. ... 3,000 Unrealized Holding Gain or Loss— Equity. ................ 3,000 (c) The Unrealized Holding Gain or Loss—Income account is reported in the income statement under Other Revenues and Gains. The Unrealized Holding Gain or Loss—Equity account is reported as a part of other comprehensive income and as a component of stockholders’ equity until realized. The Securities Fair Value Adjustment account is added to the cost of the Available-for-Sale or Trading Securities account to arrive at fair value....
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