Question

Unrealized holding gains and losses are included in an investor's earnings for:

Trading Securities - Securities Available-For-Sale
a. Yes No
b. Yes Yes
c. No Yes
d. No No

Multiple Choice
Option a
Option b
Option c
Option d

Answer 1

Unrealized holding gains and losses are not included in an investor's earnings for trading securities, but they are included for securities available-for-sale.

Step-by-step explanation:

Unrealized holding gains and losses are not included in an investor's earnings for trading securities, but they are included for securities available-for-sale.

For trading securities, changes in the fair value of the investment are recognized as gains or losses in the investor's earnings. These gains or losses affect the net income of the investor.

On the other hand, for securities available-for-sale, unrealized gains and losses are reported in the accumulated other comprehensive income (AOCI) section of the investor's equity.

They are not recognized in the investor's earnings until the investment is sold.