Use the following information for the Quick Study below.
[The following information applies to the questions
displayed below.]
Kitty Company began operations in the current year and
acquired short-term debt investments in trading securities. The
year-end cost and fair values for its portfolio of these debt
investments follow.
| Portfolio of Trading Securities | Cost | Fair Value | ||||||||
| Tesla Bonds | $ | 12,600 | $ | 9,450 | ||||||
| Nike Bonds | 20,800 | 21,840 | ||||||||
| Ford Bonds | 5,200 | 4,160 | ||||||||
QS 15-5 Reporting trading securities on financial statements LO P1
(1) After the fair value adjustment is made,
prepare the assets section of Kitty Company’s December 31
classified balance sheet.
(2) In which income statement section is the
unrealized gain (or loss) on the portfolio of trading securities
reported?
1.
Kitty Company
Assets Section of Balance Sheet
December 31
Assets
Current Assets
Debt investments—Trading (at cost)......................... $38,600
Fair value adjustment—Trading................................ (3,150)
Debt investments—Trading (fair value)..................... $35,450
2. Other Revenues and Gains (or Expenses and Losses) section.
The unrealized gain (or loss) is reported in the Other Revenues and Gains (or Expenses and Losses)section on the income statement.
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