Unrealized gains or losses on available for sale

153. Unrealized gains or losses on available-for-sale securities are reported where in the
financial statements?
a. Nowhere since only realized gains are reported.
b. In the “Other revenues and gains” or “Other expenses and losses” sections of the
income statement.
c. Below unusual items in the income statement.
d. In the stockholders’ equity section of the balance sheet.
Ans: D, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA:
Reporting
H-35
FOR INSTRUCTOR USE ONLY

Test Bank for Financial Accounting: Tools for Business Decision Making, Eighth Edition
154. At the end of its first year, the securities portfolio consisted of the following common
stocks, all of which represent less than 20% ownership.
Cost Fair value
Draper Corporation $ 46,400 $ 50,000
Edmunds Inc. 60,000 55,800
Feazell Corporation 80,000 76,000
$186,400 $181,800
The unrealized loss to be recognized under the fair value method is
155. At the end of its first year, the securities portfolio consisted of the following common
stocks, all of which represent les then 20% ownership.
Cos t Fair Value
Draper Corporation $ 46,400 $ 50,000
Edmunds Inc. 60,000 55,800
Feazell Corporation 80,000 76,000
$186,400 $181,800
In the following year, the Edmunds common stock is sold for cash proceeds of $57,000.
The gain or loss to be recognized on the sale is a
156. At the end of the first year of operations, the total cost of the trading securities portfolio is
$245,000. Total fair value is $250,000. The financial statements should show