Question

Beresford Inc. purchased several investments in debt securities during 2020, its first year of operations. The following information pertains to these securities. The fluctuations in their fair values are not considered permanent Amortired Cost 12/31/2021 $375,000 Amortized Cost 12/31/2020 $380,500 Fair Value 12/31/2021 $413,000 Fair Value 12/31/2020 $388,000 Cost Held-to-Maturity Securities: ABC Co. Bonds $ 74,400 $ 52,000 $ 45,900 Fair Value Fair Value 12/31/2020 12/31/2021 $ 58,000 $ 69,000 $ 60,000 $ 96,300 $ 57,000 $ 51,500 Cost Trading Securities: $153,000 Fair Value 12/31/2021 $ 165,500 DEF Co. Bonds GEH Inc. Bonds IJK Inc. Bonds Fair Value 12/31/2020 $ 151,400 Available-for-Sale Securities: LMN Co. Bonds What total unrealized holding gain would Beresford report in its 2021 income statement relative to its investments in bonds?

Answer 1

Unrealized holding gains or losses are reported only for the trading securities.

Unrealized holding gain or loss to be reported in income statement

= Ending fair value of trading securities - Beginning fair value of trading securities

= (69,000+96,300+51,500) - (58,000+60,000+57,000)

= 216,800 - 175,000

= 41,800