BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
reported under Other Expenses and Losses in theincome statement.
|
|
|
closed-out at the end of the accounting period.
|
|
|
reported as a separate component of stockholders’equity.
|
|
|
deducted from the cost of the investment.
|
Detailed explanation-1: -Debt securities classified as available-for-sale securities are reported at fair value, with unrealized gains and losses excluded from earnings and reported as a net amount in a separate component of shareholders’ equity, subject to impairment.
Detailed explanation-2: -Securities that are available for sale are also recorded on a company’s balance sheet as an asset at fair value. However, the unrealized gains and losses are recorded in comprehensive income on the balance sheet.
Detailed explanation-3: -Unrealized holding gains and losses for available-for-sale securities (including those classified as current assets) should be excluded from net income and reported as a net amount in other comprehensive income within shareholders’ equity until realized.
Detailed explanation-4: -’ Due to fair value treatment for “available for sale” securities, Unrealized gains or losses are included in the balance sheet on the asset side. However, such gains do not impact the net income of the company.
Detailed explanation-5: -The unrealized gains and losses related to changes in the fair value of available-for-sale debt securities are recorded in an unrealized holding gain or loss account. This account is reported as other comprehensive income and as a separate component of stockholders’ equity until realized.