Question

Unrealized holding gains and losses for securities to be held-to-maturity are:

Reported as a separate component of the shareholders' equity section of the balance sheet.
Included in the determination of income from operations in the period of the change.
Reported as extraordinary items.
Not reported in the income statement nor the balance sheet.

Answer 1

Unrealized holding gains and losses for securities to be held-to-maturity are reported as a separate component of the shareholders' equity section of the balance sheet.

Step-by-step explanation:

Unrealized holding gains and losses for securities to be held-to-maturity are reported as a separate component of the shareholders' equity section of the balance sheet. They are not included in the determination of income from operations in the period of the change, reported as extraordinary items, nor reported in the income statement.

They are reported in the balance sheet because they represent changes in the value of the securities that have not been sold yet. These gains and losses are not recognized as income or expenses until the securities are actually sold.