Question

When a debt security is appropriately carried and reported as securities available for sale, a gain should be reported in the income statement:

A) When the fair value of the security increases.

B) When the present value of the security increases.

C) Only when the Dow Jones Industrial Average increases at least 100 points.

D) Only when the security is sold.

Answer 1

A gain should be reported in the income statement on available for sale Debit Security Only when the security is sold.

Unrealized gains/losses on available for sale security are reported in other comprehensive income.

Option D is correct