Q6RQ.
Question
When disposing of an available-for-sale debt investment, where is the gain or loss on disposal reported in the financial statements?
Step-by-Step Solution
Verified Answer
Gain or loss on disposal is reported on the income statement.
1Step 1: Definition of Unrealized Gains
An increase in the value of any asset or investment held by the business that is not sold yet is known as unrealized gain. Such gain is included in the comprehensive income.
2Step 2: Reporting Gain and Loss on Disposal of Available for Sale Debt Investment
Gains arising from the disposal of available for sale debt investment must be reported as other income on the income statement. Any loss arising from such disposal must be recorded on the income statement as other loss. This gain/loss is reported separately from the operating income and losses.
Other exercises in this chapter
Q4RQ
Briefly describe the specific types of debt and equity securities.
View solution Q5RQ.
How is the purchase of a held-to-maturity debt security at face value recorded?
View solution Q. 7RQ
What method is used for investments in equity securities when the investor has significant influence and typically 20% to 50% ownership? Briefly describe how di
View solution Q.8RQ
Question: What method is used for investments in equity securities with more than 50% ownership? Briefly describe this method.
View solution