Question

For which of the following investments will unrealized holding gains or losses be included in net...

For which of the following investments will unrealized holding gains or losses be included in net income? Please enter the number (i.e., 1, 2, 3, or 4) representing the correct answer in the blank.

1.   held-to-maturity equity investments.

2.   available-for-sale debt investments.

3.   available-for-sale equity investments.

4.   trading equity investments.

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Homework Answers

Answer #1

Securities that are held for trading is recorded in the balance sheet and the unrealized gains or losses are recorded in income statement.

Hence the correct option is 4. Trading equity investment.

Held to maturity - securities that are purchased with an intention to keep it till maturity.

Available for Sale securities whether debt or equity are reported at fair value and related unrealized gain or losses are reported in other comprehensive income statement not in Net INcome.

Hence, the correct option is 4.

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