Smith buys and sells securities, which it typically classifies as available for

Question

Smith buys and sells securities, which it typically classifies as available for sale. On December 15, 2016, Smith purchased $506,000 of Jones shares and elected the fair value option to account for the Jones investment. As of December 31, 2016, the Jones shares had a fair value of $579,000. In the 2016 financial statements, Smith will report (ignore taxes):

An investment in Jones of $506,000.

Investment income of $73,000 in its income statement.

Other comprehensive income of $73,000.

Accumulated other comprehensive income of $579,000.

Explanation / Answer

Other comprehensive income of $73,000

Increase is recorded as a part of other comprehensive income and not recognized as income in the current period. This is shown as a part of shareholders equity in the balance sheet.

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