Loser Corp. holds two trading investments. At year end, one has an unrealized gain of $2,000 and the other has an unrealized loss of $4,500. The trading investments would be reported at fair value and Loser Corp. would report a net unrealized loss of:
A)$2,500 in the income statement.
B)$4,500 in the income statement.
C)$2,500 in the statement of comprehensive income.
D)$4,500 in the statement of comprehensive income.

Question

Quizplus · Accepted Answer

Since the investments are classified as trading, they would be reported at fair value with any unrealized gains or losses recognized in the income statement. The net unrealized loss would be the difference between the unrealized gain and unrealized loss, which is ($2,000 - $4,500) = -$2,500. Since it's a net loss, we would report it as a loss in the income statement, leading to choice A.