Question

Mid-South has three debt securities during 2020 and 2021, its first two years of operations. The following information pertains to these securities. The fluctuations in these fair values are not considered permanent. Securities Fair Value Fair Value Amortized Cost Amortized Cost (12/31/2020) (12/31/2021) (12/31/2020) (12/31/2021)HTM SecurityABC Co. Bonds $350,000 $400,000 $380,000 $350,000Trading SecurityDEF Co. Bonds $48,000 $60,000 $70,000 $65,000AFS SecurityGHI Bonds $130,000 $150,000 $140,000 $145,000 What unrealized holding gain would Mid-South report in its 2021 other comprehensive income relative to its investments in bonds?

Answer 1

Total Unrealized gain = $50,000

Step-by-step explanation:

ABC Co. Bonds - Unrealized holding $50,000

gain in 2021 ($400,000 - $350,000)

DEF Co. Bonds - Unrealized holding ($5,000)

loss in 2021 ($60,000 - $65,000)

GHI Bonds - Unrealized holding $5,000

gain in 2021 ($150,000 - $145,000)

Total Unrealized gain $50,000

Unrealized holding = Fair value (12/31/2021) - Amortized cost (12/31/2021)