Question

PM Distributors began Year 2 with Equity Investments of $8,400 ​(which consisted of a single​ investment) as well as a debit balance of

$900 in the Fair Value Adjustment − Equity Investments account. PM does not have significant influence over the​ investee, and the investment has a readily determinable fair value. This trading security was sold for $9,300 during Year 2. How much was the gain or loss for the sale of this investments and how is it​ recorded?

A.

Realized Gain of

$ 900$900​,

reported as part of Net Income.

B.

Unrealized Gain of

$ 900$900​,

reported as part of Other Comprehensive Income.

C.

No gain or loss​ reported, as the investment was sold for the adjusted fair value.

D.

Realized Loss of

$ 900$900​,

reported as part of Net Income.

Answer 1

Gain realized = Sale price - initial cost = 9,300 - 8,400 = 900 Option A is the answer Comment if you face any issues