Questions: 6 of 33 Concepts completed (i) Multiple Select Questlon Select all that apply How are available-for-sale debt securities reported? (Select all that apply.) Unrealized gains and losses are reported as part of net income when they occur. Unrealized gains and losses are reported as part of other comprehensive income when they occur. Realized gains and losses are reported in net income in the period the investment is sold.

6 of 33 Concepts completed
(i)

Multiple Select Questlon
Select all that apply

How are available-for-sale debt securities reported? (Select all that apply.)
Unrealized gains and losses are reported as part of net income when they occur.
Unrealized gains and losses are reported as part of other comprehensive income when they occur.
Realized gains and losses are reported in net income in the period the investment is sold.
Transcript text: 6 of 33 Concepts completed (i) Multiple Select Questlon Select all that apply How are available-for-sale debt securities reported? (Select all that apply.) Unrealized gains and losses are reported as part of net income when they occur. Unrealized gains and losses are reported as part of other comprehensive income when they occur. Realized gains and losses are reported in net income in the period the investment is sold.
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Solution

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Answer

The correct options are:

  • Unrealized gains and losses are reported as part of other comprehensive income when they occur.
  • Realized gains and losses are reported in net income in the period the investment is sold.
Explanation
Option 1: Unrealized gains and losses are reported as part of net income when they occur.

This option is incorrect. For available-for-sale debt securities, unrealized gains and losses are not reported as part of net income. Instead, they are reported in other comprehensive income.

Option 2: Unrealized gains and losses are reported as part of other comprehensive income when they occur.

This option is correct. According to accounting standards, unrealized gains and losses on available-for-sale debt securities are reported in other comprehensive income until they are realized through a sale.

Option 3: Realized gains and losses are reported in net income in the period the investment is sold.

This option is correct. When available-for-sale debt securities are sold, any realized gains or losses are recognized in net income during the period of the sale.

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