Multiple Choice
On January 1,2014,a company purchased long-term available-for-sale securities in one company.The cost was $100,000 and the investor owns 5% of the outstanding common stock of the investee.The investor does not use an allowance account to adjust the investment.At December 31,2014,the fair value of the investment is $97,000.What journal entry is needed on December 31,2014?
A) debit Unrealized Loss on Investment in Available-for-Sale Securities for $3,000 and credit Investment in Available-for-Sale Securities for $3,000
B) debit Investment in Available-for-Sale Securities for $2,000 and credit Unrealized Gain on Investment in Available-for-Sale Securities for $2,000
C) debit Investment in Available-for-Sale Securities for $5,000 and credit Unrealized Gain on Investment in Available-for-Sale Securities for $5,000
D) debit Investment in Available-for-Sale Securities for $3,000 and credit Unrealized Gain on Investment in Available-for-Sale Securities for $3,000
Correct Answer:
Verified
Correct Answer:
Verified
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