Yankton Company began the year without an investment portfolio. During the year, it purchased investments classified as trading securities at a cost of $13,000. At the end of the year, the market value of the securities was $11,000. Yankton Company's financial statements for the current year should show
A) an unrealized loss of $2,000 on the income statement and net trading securities of $13,000 on the balance sheet
B) no unrealized loss on the income statement and net trading securities of $13,000 on the balance sheet
C) no unrealized loss on the income statement; net trading securities of $11,000 and an unrealized loss of $2,000 as a stockholders' equity adjustment on the balance sheet
D) an unrealized loss of $2,000 on the income statement and temporary investments of $11,000 on the balance sheet

Question

Quizplus · Accepted Answer

Unrealized loss recorded on the income statement = Fair value of the investment - Original cost of the investment = $11,000 - $13,000 = ($2,000)

Yankton Company Began the Year Without an Investment Portfolio