Question

Syracuse, Inc., reports the following details of its passive investments in marketable equity securities in its 2017 annual report:

Syracuse, Inc., reports the following details of its passive investments in marketable equity securities in its 2017 annual report:

($ thousands)	2017	2016
Cost of marketable equity securities	$102,907	$83,849
Gross unrealized gains	3,602	1,694
Gross unrealized losses	(1,198)	(2,434)

a. What amount appeared on Syracuse’s balance sheet in 2017 for its marketable equity securities?

b. Calculate the net unrealized gains and or losses for the marketable equity securities for both years.

a. What amount appeared on Syracuse’s balance sheet in 2017 for its marketable equity securities?

b. Calculate the net unrealized gains and or losses for the marketable equity securities for both years.

Answer 1

a. As Syracuse Inc has held the equity investment as passive investments which are generally intended to be held for long term use, they come in the class of assets held for sale

Assets held for sale appear in the Balance Sheet at their fair value

So, the fair value of the stock can be computed as follows in $ thousand

Cost of the equity stock	102,907
Add. Unrealized gain	3,602
Less. Unrealized loss	(1,198)
Fair value in 2017	105,311

b. For 2016,the net unrealized loss was $1694-2434=-740

In, 2017, the total unrealized gain on the stock was 3602-1198=2404

However, a net loss of $740 was booked in 2016

So, in 2017, the profit which will be booked = 2404+740= 3,144