Question

Indicate how unrealized holding gains and losses should be reported for debt investments classified as trading, available-for-sale, and held-to-maturity?

1) Unrealized holding gains and losses for debt investments classified as trading should be reported in the income statement.
2) Unrealized holding gains and losses for debt investments classified as available-for-sale should be reported in other comprehensive income.
3) Unrealized holding gains and losses for debt investments classified as held-to-maturity should not be reported until the investment is sold or matures.
4) All of the above.

Answer 1

Unrealized holding gains and losses for debt investments differ based on their classification.

Step-by-step explanation:

Unrealized holding gains and losses for debt investments classified as trading should be reported in the income statement.

Unrealized holding gains and losses for debt investments classified as available-for-sale should be reported in other comprehensive income.

Unrealized holding gains and losses for debt investments classified as held-to-maturity should not be reported until the investment is sold or matures.

Therefore, the correct answer is option 4) All of the above.