Question

ewok enterprises recently elected the fair value option to account for its investment in yoda inc. ewok purchased the shares for 21000 and the shares are currently trading for 190000 at year end. what is the amount of gain or loss reported at year end for this investment and where is gain or loss reported

Answer 1

Answer: Unrealized gain of $169,000

Step-by-step explanation:

Therefore,

Purchased price of shares = $21, 000

Trading price at year end = $190,000

trading price - purchased price

Unrealized gain which is the difference in the trading price at year end and the purchased price.

$190,000 - $21,000= $169,000

The Unrealized gain will be $169,000 as the carrying balance on Ewok's balance sheet will be $190,000 while purchased price will be $21,000