PE 15-5A Valuing available-for-sale securities at fair value

On January 1, 2014, Valuation Allowance for Available-for-Sale Investments had a zero balance. On December 31, 2014, the cost of the available-for-sale securities was $78,400, and the fair value was $72,600. Prepare the adjusting entry to record the unrealized gain or loss on available-for-sale investments on December 31, 2014.


Answer:

2014
Dec. 31 Unrealized Gain (Loss) on Available-for-Sale
Investments* 5,800
Valuation Allowance for Available-for-Sale
Investments 5,800
To record decrease in fair value of
available-for-sale securities.
* Available-for-sale investments at fair value,
December 31, 2014……………………………………………………………… $72,600
Available-for-sale investments at cost, December 31, 2014………………… 78,400
Unrealized gain (loss) on available-for-sale investments…………………… $ (5,800)