On January 1, 2014, Valuation Allowance for Available-for-Sale Investments had a zero balance

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 $24,260, and the fair value was $26,350. Prepare the adjusting entry to record the unrealized gain or loss on available-for-sale investments on December 31, 2014.


Answer:

2014
Dec. 31 Valuation Allowance for Available-for-Sale
Investments* 2,090
Unrealized Gain (Loss) on Available-for-Sale
Investments 2,090
To record increase in fair value of
available-for-sale securities.
* Available-for-sale investments at fair value,
December 31, 2014……………………………………………………………… $26,350
Available-for-sale investments at cost, December 31, 2014………………… 24,260
Unrealized gain (loss) on available-for-sale investments…………………… $ 2,090