Chang Company purchased several investments in December 2017. Costs and market v

Question

Chang Company purchased several investments in December 2017. Costs and market values of those investments on December 31, 2017, are presented below:

Assuming all of the securities are classified as available-for-sale, the journal entry required on December 31, 2017, the end of Chang's fiscal year, would include a

debit to Unrealized Holding Gain/Loss-Available-for-Sale of $60,000

credit to Unrealized Holding Gain/Loss-Available-for-Sale of $80,000

debit to Investment in Available-for-Sale Securities of $60,000

credit to Unrealized Holding Gain/Loss-Available-for-Sale of $60,000

Cost Market Value XYZ stock $200,000 $180,000 ABC stock 400,000 420,000 DEF stock 600,000 540,000

Explanation / Answer

correct option is "A" -debit to Unrealized Holding Gain/Loss-Available-for-Sale of $60,000

Investment 1 : 20000 loss

Investment 2 :   20000 gain

INvestment 3 : 60000 Loss

Net loss = 60000 loss

entry :

Unrealised loss on securities debit and available for sale securities credit 60000

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