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S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2016 S&L purchased Coca-Cola common shares for $745,000 and sold the shares on January 3, 2017, for $748,500. At December 31, the shares had a fair value of $742,500, and S&L has the intent and ability to hold the investment until fair value recovers What pretax amounts did S&L include in its 2016 and 2017 earnings as a result of this investment? Pretax amount 2016 2017 Gain No gain/loss in earnings

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Answer: Pre-tax $ 2016 Loss $2,500 [If error message is thrown, it shall be insert as a negative figure] 2017 Gain $6,000 [lt is a positive figure] Workings: intial urchase price of Coca-cola hares in 20165745.00 Fair value of the shares on December 31, 2016 $742,500 Unrealized holding loss included in 2016 net income $2,500 I$745,000- $742,500] (It is considered as loss as the fair value is less than purchase price) $742,500 $748,500 Fair value of the shares on December 31, 2016 Sale value of the shares on January 3, 2017 Unrealized holding gain included in 2017 net income $6,000 I$748,500 - $742,500] (It is considered as gain as the sale value is higher than fair value as of Dec. 31, 2016)

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