Question

On January 1, 2021, Everglade Company purchased the following debt securities and properly accounted for them as securities available-for-sale: Security Cost Fair Value, 12/31/2021 ABC $ 40,000 $ 55,000 DEF 72,000 65,000 XYZ 16,000 20,000 All declines in value are considered temporary. What amount should the Everglade Company report relative to these securities in its 2021 statement of other comprehensive income

Answer 1

Answer:

Unrealized gain = $12,000

Explanation:

Security    Cost A     Fair value B    Unrealized amount (B-A)

ABC          $40,000    $55,000                 $15,000

DEF           $72,000    $65,000                -$7,000

XYZ           $16,000     $20,000                 $4,000

                                                        Total    $12,000

So, the unrealized gain to be recorded is $12,000