Trang Corporation reported trading investments of $15,000 on December 31, 2014.

Question

Trang Corporation reported trading investments of $15,000 on December 31, 2014. The company realizes a decrease of $3,000 in the fair value of the trading investments by the end of the year 2015. Which of the following is the correct journal entry?

A)

Trading Investments

3,000

            Unrealized Holding Loss—Trading

3,000

B)

Unrealized Holding Loss—Trading

3,000

            Trading Investments

3,000

C)

Unrealized Holding Loss—Trading

3,000

            Fair Value Adjustment—Trading

3,000

D)

Fair Value Adjustment—Trading

3,000

            Unrealized Holding Loss—Trading

3,000

Trading Investments

3,000

            Unrealized Holding Loss—Trading

3,000

Explanation / Answer

Trang Corporation reported trading investments of $15,000 on December 31, 2014. The company realizes a decrease of $3,000 in the fair value of the trading investments by the end of the year 2015. Which of the following is the correct journal entry?

B)

Unrealized Holding Loss—Trading

3,000

            Trading Investments

3,000

Note : It is Trading Investment any unrealised loss or gain at the end of year is transfered to Trading Investment account where as if Investment is Available for sale security than we create Fair Value Adjustment account.

Unrealized Holding Loss—Trading

3,000

            Trading Investments

3,000

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