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

Question

Quizplus · Accepted Answer

The primary difference lies in where the unrealized holding loss or gain on investments is reported within the financial statements. For available-for-sale investments, unrealized gains and losses are reported in other comprehensive income until they are sold. For trading investments, unrealized gains and losses are reported in the income statement.

The Primary Difference in Accounting for Available-For-Sale Investments in Stock