Herbst Enterprises purchased equity securities in Year 1 and classified them as available-for-sale. They reported an unrealized gain inYear 1 and an additional unrealized gain in Year 2. They decide to sell the securities in Year 3 for $28,000 more than the fair valuerecorded in Year 2. Based on this, Herbst needs toreport the realized gain as dividend revenue.O restate the Year 1 and Year 2 financial reports to change the unrealized gains to realized gains.report the realized gain under other comprehensive income.O make a reclassification adjustment for the securities they sold.

Herbst Enterprises does NOT need to report the realized gain as dividend revenue or restate the Year…

Answered: Herbst Enterprises purchased equity…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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