Yankton Company began the year without an investment portfolio. During the year, it purchased investments classified as available-for-sale securities at a cost of $13,000. At the end of the year, the market value of the securities was $11,000. The Yankton Company's financial statements for the current year should showa loss of $2,000 on the income statement and available-for-sale investments of $13,000 on the balance sheetno loss on the income statement, available-for-sale investments netting to of $11,000, and an unrealized loss of $2,000 as a stockholders' equity adjustment on the balance sheetno loss on the income statement and available-for-sale investments of $13,000 on the balance sheet

Question

Jorge Pollard

Business

23 November, 15:44

Yankton Company began the year without an investment portfolio. During the year, it purchased investments classified as available-for-sale securities at a cost of $13,000. At the end of the year, the market value of the securities was $11,000. The Yankton Company's financial statements for the current year should showa loss of $2,000 on the income statement and available-for-sale investments of $13,000 on the balance sheetno loss on the income statement, available-for-sale investments netting to of $11,000, and an unrealized loss of $2,000 as a stockholders' equity adjustment on the balance sheetno loss on the income statement and available-for-sale investments of $13,000 on the balance sheet

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Alannah Walsh · Answer 1

No loss on the income statement, available-for-sale investments netting to of $11,000, and an unrealized loss of $2,000 as a stockholders' equity adjustment on the balance sheet

Explanation:

In this question, we have to find the unrealized gain or loss which is shown below:

Unrealized gain or loss = Market value of the securities - the cost of securities

= $11,000 - $13,000

= - $2,000

This - $2,000 reflect the unrealized loss

The journal entry is also shown below for better understanding

Other Comprehensive Income A/c Dr $2,000

To Asset A/c $2,000

(Being the amount of loss is recorded)

Thus, it does not affect the income statement at all.