The primary difference in accounting for available-for-sale debt investments and accounting for trading debt investments is which of the following?
A)Measuring the fair value of the long-term and short-term investment portfolios on the balance sheet.
B)Determination of the acquisition cost.
C)Reporting of the unrealized holding gain or loss on investments within the financial statements.
D)Determination of the unrealized holding gain or loss.

Question

Quizplus · Accepted Answer

The primary difference in accounting for available-for-sale debt investments and accounting for trading debt investments is the reporting of the unrealized holding gain or loss on investments within the financial statements. Available-for-sale debt investments are accounted for at fair value with unrealized holding gains and losses reported as other comprehensive income. Trading debt investments, on the other hand, are accounted for at fair value with unrealized holding gains and losses reported as current period earnings. The determination of acquisition cost and the measurement of fair value are common to both types of investments.

The Primary Difference in Accounting for Available-For-Sale Debt Investments and Accounting