Homework Answers
Sale value of AFS securities that were sold = $29,000
Less: Carrying value of AFS securities that were sold = $25,000
Gain on sale of AFS securities = $4,000
Total value of AFS securities is $100,000
Carrying value of AFS securities after the sale $75,000 ($100,000 - $25,000)
The market value of AFS securities is $81,000 at the end of 2016. That means, there is a gain of $6,000 ($81,000 - $75,000) at the end of 2016.
The total gain from AFS securities = $10,000 ($4,000 + $6,000).
Less: Unrealized gain (losses) on AFS securities = $4,000
Net gain on AFS securities = $6,000.
Therefore, the correct option is C. $6,000.
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