Asked by Manuel Rodriguez on Jul 12, 2024
Verified
On January 1, the Valuation Allowance for Available-for-Sale Investments account had a zero balance. On December 31, the cost of the available-for-sale securities was $48,700, and the fair value was $39,200. Prepare the adjusting entry to record the unrealized gain or loss for available-for-sale investments on December 31.
Available-For-Sale Investments
Financial assets not classified as held-to-maturity or trading securities, which can be sold in the financial markets.
Unrealized Gain
The increase in the value of an investment that has not been sold yet, and thus, the gain is not yet realized as actual income.
Adjusting Entry
An accounting transaction recorded at the end of a financial period to adjust account balances in the ledgers.
- Comprehend the treatment and reporting of available-for-sale securities on financial statements.
- Understand the methodology for recording adjustments of investments to their fair value and the consequences on financial reports.
Verified Answer
Learning Objectives
- Comprehend the treatment and reporting of available-for-sale securities on financial statements.
- Understand the methodology for recording adjustments of investments to their fair value and the consequences on financial reports.
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