Question 15.5: Valuing Available-for-Sale Securities at Fair Value On Janua...
Valuing Available-for-Sale Securities at Fair Value
On January 1, 20Y6, Valuation Allowance for Available-for-Sale Investments had a zero balance. On December 31, 20Y6, the cost of the available-for-sale securities was $45,700 and the fair value was $50,000.
Prepare the adjusting entry to record the unrealized gain or loss for available-for-sale investments on December 31, 20Y6.
20Y6
Dec. 31 Valuation Allowance for Available-for-Sale Investments . . . . . . . . . . . . . . . . . . 4,300*
Unrealized Gain (Loss) on Available-for-Sale Investments . . . . . . . . . . . . . 4,300
To record increase in fair value of available-for-sale securities.
*Available-for-sale investments at fair value, December 31, 20Y6 $50,000
Less available-for-sale investments at cost, December 31, 20Y6 \underline{45,700}
Unrealized gain (loss) on available-for-sale investments \underline{\underline{\$ 4,300}}