Sale of Securities and the Market Adjustment Account
The company purchased the following securities during Year 1:
|
|
|
|
Market Value |
|
Security |
Classification |
Cost |
(Dec 31, Year 1) |
|
A |
Trading |
$ 9,000 |
$10,000 |
|
B |
Trading |
10,000 |
16,000 |
On July 23, Year 2, the company sold all of the shares of security B for a total of $9,500. As of December 31, Year 2, the shares of security A had a market value of $5,800. No other activity occurred during Year 2 in relation to the trading security portfolio. (1) What amount should the company report as realized gain or loss in the Year 2 income statement? Clearly indicate whether the amount is a gain or a loss. (2) What amount should the company report as unrealized gain or loss in the Year 2 income statement? Clearly indicate whether the amount is a gain or a loss.