Instrument Corporation has the following investments which were held throughout

Question

Instrument Corporation has the following investments which were held throughout 2014–2015:

Fair Value

Cost 12/31/14. 12/31/15

Trading. $600,000. $800,000. $760,000

Available-for. 600,000. 640,000. 720,000

1)What amount of gain or loss would Instrument Corporation report in its income statement for the year ended December 31, 2015 related to its investments?

2) Make the journal entry on 12/31/2015

3) A)What amount would be reported as accumulated other comprehensive income related to investments in Instrument Corporation’s balance sheet at December 31, 2014?

B) Make journal entry

Explanation / Answer

1.

Gain or loss reported in Income statement = Unrealized gain related to trading securities.

Loss reported in Income statement for the year ended December 31, 2015 = 40,000 (800,000 - 760,000)

2.

3.

Accumulated other comprehensive income on Blance sheet at December 31, 2014 = Change in the available for sale securities.

= 640,000 - 600,000

= 40,000

B.

Date Particulars Debit Credit 12/31/2015 Unrealized loss (I/S) 40,000 (800,000-760,000) Valuation allowance (HFT) 40,000 (800,000-760,000)

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