Question 3 of 7 alue 400 points SL Financial buys and sells

Question 3 (of 7 alue 4.00 points S&L; Financial buys and sells securities which it classifies as available-for-sale. On December 27. 2016, S&L; purchased Coca-Cola common shares for $965.000 and sold the shares on January 3, 2017, for $968,500. At December 31, the shares had a fair value of $960,000 and S&L; has the intent and ability to hold the investment until fair value recovers What pretax amounts did S&L; include in its 2016 and 2017 earnings as a result of this investment? Pretax amount 2016 2017 O Type here to search 3 4 5 6 7 8

Solution

Unrealised gain and loss are not included in the Securities that are available for sale.In 2017, value raises to $8500 (968500-960000), that means unrealised loss of $5000 (960000 - 965000) in 2016 will be adjusted against it and gain on sale of $3500 (968500-965000) will be reported in 2017

        Pretax amount

2016 No gain or loss 0

2017 gain    $3500 (968500-965000)