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Mini Case #2: Risner Company's Investment in Marketable Equity Securities

Risner Company purchased $325,000 of marketable equity securities in Company Q and Company R in 2019. At the end of 2019, the market value of the securities declined by $100,000, resulting in an unrealized loss that should be reported on Risner's 2019 income statement. By the end of 2020, the market value recovered by $70,000, so an unrealized gain of $70,000 should be reported on Risner's 2020 income statement. No amounts should be reported for other comprehensive income in 2019 or 2020.

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137 views

Mini Case #2: Risner Company's Investment in Marketable Equity Securities

Risner Company purchased $325,000 of marketable equity securities in Company Q and Company R in 2019. At the end of 2019, the market value of the securities declined by $100,000, resulting in an unrealized loss that should be reported on Risner's 2019 income statement. By the end of 2020, the market value recovered by $70,000, so an unrealized gain of $70,000 should be reported on Risner's 2020 income statement. No amounts should be reported for other comprehensive income in 2019 or 2020.

Uploaded by

Amy Clementine
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ACC 808

Spring 2021

Mini Case #2
The following data pertain to Risner Company’s investment in marketable equity securities.
Risner is a publicly held company. Assume that all securities were bought in 2019 and held
throughout 2019 and 2020 and ignore taxes.

Risner Company’s investment in marketable equity securities


Market Value
Cost 12/31/20 12/31/19
Company Q 165,000 170,000 110,000
Company R 160,000 125,000 115,000

1. Record the purchase of the securities and any adjustments to their market value at
12/31/19 and 12/31/20.
Purchase: Short-term investment 325,000
Cash 325,000
12/31/19: Unrealized loss on investment 100,000
Short-term investment 100,000
12/31/20: Short-term investment 70,000
Unrealized gain on investment 70,000

2. What amount should Risner report as unrealized gain (loss) on its 2019 income
statement as part of net income?

Report unrealized loss of $100,000

3. What amount should Risner report as unrealized gain (loss) on its 2020 income
statement as part of net income?

Report unrealized gain of $70,000

4. What amount should Risner report as unrealized gain (loss) for its 2019 other
comprehensive income?
0

5. What amount should Risner report as unrealized gain (loss) for its 2020 other
comprehensive income?
0

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