Founded on January 1, 20X1, Gehl Company had the following passive investments in equity securities at the end of 20X1 and 20X2: Equity SecurityCost12/31/X2 Fair ValueA$96,000$94,000 B 184,000 162,000 C 126,000 136,000 Required:If the company recorded a $4,000 debit to its Fair value adjustment account as its 20X2 fair value adjustment, what must have been the unrealized gain or loss reported at the end of 20X1?

An unrealized gain is an increase in the value of an asset or investment that an investor has not sold, such as an open stock position. An unrealized loss is a decrease in the value of an ongoing investment. A gain or loss on an investment is realized when it is sold.Unrealized gain in 20X1 = Fair value on 31.12.20X1 - Total cost of securities - Unrealized gain = $392,000 - $406,000 - $4,000 = ($18,000)

Answered: Founded on January 1, 20X1, Gehl…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Founded on January 1, 20X1, Gehl Company had the following passive investments in equity securities at the end of 20X1 and 20X2:

Equity Security	Cost	12/31/X2 Fair Value
A	$	96,000	$	94,000
B		184,000		162,000
C		126,000		136,000

Required:

If the company recorded a $4,000 debit to its Fair value adjustment account as its 20X2 fair value adjustment, what must have been the unrealized gain or loss reported at the end of 20X1?

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions