A company failed to record unrealized gains of $26 million on its debt investments classified as trading securities. Its tax rat
1 answer:
Answer: Total shareholders' equity = $16.90 million
Explanation:
Unrealized gains or losses of trading securities investment will be recorded in retained earnings.
Unrealized gains (net of taxes) will increase the balance of retained earnings, which is a part of shareholders' equity. If unrealized gains are not recorded then the retained earnings is understated.
Unrealized gains (net of taxes) = Unrealized gains - Taxes
= $26 million - 35% of $26 million
= $26 million - $9.10 million
= $16.90 million
You might be interested in