In June, Potter Corp paid $25,000 for 1,000 shares of Weasley Corp, which was classified as a long-term available-for-sale investment. At year-end, the fair value of the investment is $27,500. Potter will report
A)nothing until the investment is sold.
B)a $2,500 unrealized gain in its income statement.
C)a $2,500 realized gain in its income statement.
D)a $2,500 unrealized gain as other comprehensive income.

Question

Quizplus · Accepted Answer

The investment is classified as long-term available-for-sale, which means the unrealized gains and losses are reported as other comprehensive income until the investment is sold. Therefore, Potter Corp will report a $2,500 unrealized gain as other comprehensive income.

In June, Potter Corp Paid $25,000 for 1,000 Shares of Weasley