When a firm sells a trading security,it recognizes:
A) the average of the selling price and the book value as a gain or loss in measuring net income.
B) the difference between the selling price and the book value as a gain or loss in measuring net income.
C) amortizes any difference between the acquisition cost and maturity value as interest revenue over the life of the debt.
D) the difference between the selling price and the acquisition cost of the security as a realized gain or loss on the income statement.

Question

Quizplus · Accepted Answer

When a firm sells a trading security, it recognizes the difference between the selling price and the book value as a gain or loss in measuring net income. The book value is the original cost of the security adjusted for any amortization of premiums or discounts. This gain or loss is realized and will affect the net income of the company.

When a Firm Sells a Trading Security,it Recognizes