Question

Beresford Inc. purchased several investments in debt securities during 2020, its first year of operations. The following information pertains to these securities. The fluctuations in their fair values are not considered permanent.

Held-to-Maturity Securities:	Fair Value 12/31/2020			Fair Value 12/31/2021			Amortized Cost 12/31/2020			Amortized Cost 12/31/2021
ABC Co. Bonds	$	385,000		$	410,000		$	377,500		$	370,000
Trading Securities:	Fair Value 12/31/2020			Fair Value 12/31/2021			Cost
DEF Co. Bonds	$	55,000		$	66,000		$	69,100
GEH Inc. Bonds	$	57,000		$	83,000		$	49,000
IJK Inc. Bonds	$	54,000		$	48,500		$	42,900
Available-for-Sale Securities:	Fair Value 12/31/2020			Fair Value 12/31/2021			Cost
LMN Co. Bonds	$	147,400		$	161,900		$	150,000

What total unrealized holding gain would Beresford report in its 2021 income statement relative to its investments in bonds?

A. $67,000

B. $45,950

C. $46,000

D. $31,500

Answer 1

Answer:

Total unrealized holding gain reported in 2021 Income Statement                   = Difference between Fair value of Trading Securities For 2021 to 2020                   = ( $ 66,000 +$ 83,000 + $ 48,500 ) (-) ( $ 55,000 + $ 57,000 +$ 54,000 )                   =   $ 197,500 (-) $ 166,000                   = $ 31,500

Total unrealized holding gain reported in 2021 Income Statement = $ 31,500

Option (D) is Correct