Available-for-Sale Securities At the beginning of 2013, Ace Company had the foll

Question

Available-for-Sale Securities At the beginning of 2013, Ace Company had the following portfolio of investments in available-for-sale securities (common stock): Security Cost 12/31/12 Fair Value A $19,700 $24,000 B 32,000 30,500 Totals $51,700 $54,500 During 2013 the following transactions occurred: May 3 Purchased C securities (common stock) for $14,500. July 16 Sold all of the A securities for $24,000. Dec. 31 Received dividends of $1,200 on the B and C securities, for which the following information was available: Security 12/31/13 Fair Value B $34,000 C 17,200 What is the balance in the Unrealized Holding Gain/Loss account on December 31, 2013? Formula please.

Explanation / Answer

the balance in the Unrealized Holding Gain/Loss account on December 31, 2013=

Formula to judge Unrealized Gain/Loss = (New Fair Value / Selling value) - (Old Fair Value / Security cost)

For A = Selling value $24000 - Opening Fair Value $24000 = $0

For B = New Fair Value - Opening Fair Value = $34000 - $30500 = $3500

For C = New Fair Value - Security cost = $17200 - $14500 = $2700

So, the balance in the Unrealized Holding Gain/Loss account on December 31, 2013= $0 + $3500 + $2700 = $6200

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