On February 15, Jewel Company buys bonds of Marcelo Corporation for $201.410 cash. This debt investment is classified as available-for- sale securities. This is the company's first and only investment in available-for-sale securities. Jewel Company sells 30% of the Marcelo Corporation debt investment on November 17 of the current year for $104,800 cash. The entry to record this sale includes a: Multiple Choice Credit to Loss on Sale of Debt Investments for $44.377 Debit to Debt Investments-Available-for-sale (AFS) for $60423 Debit to Loss on Sale of Debt investments for $44.377

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.