contestada

Global Commerce Corporation purchased trading debt investments for $114,000 on December 31, 2018. There is a decrease of $5,800 in the fair value of the trading debt investments by the end of the year 2019. Which of the following is the correct journal entry?
A. Trading Debt Investments 5,800
Unrealized Holding
Loss-Trading 5,800
B. Fair Value
Adjustment–Trading 5,800
Unrealized Holding
Loss-Trading 5,800
C. Unrealized Holding
Loss-Trading 5.800
Retained Earnings 5,800
D. Unrealized Holding
Loss-Trading 5,800
Fair Value
Adjustment–Trading 5,800

Respuesta :

Answer:

The correct option is D,

Unrealized Holding  Loss-Trading     $5,800

Fair Value Adjustment–Trading                          $5,800

Explanation:

The decrease in fair value by $5,800 means that the investment has potentially lost $5,800 in value which is credited to fair value adjustment while the debit is posted to unrealized holding loss-trading account.

The loss cannot be realized in retained earnings since the loss is yet to be realized as the investment has not been sold for cash.

The realized loss or gain would be determined when investment is sold for cash.

Otras preguntas