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On its December 31, 2017, balance sheet, Oriole Company reported its investment in equity securities, which had cost $510000, at fair value of $488000. At December 31, 2018, the fair value of the securities was $504000. What should Oriole report on its 2018 income statement as a result of the increase in fair value of the investments in 2018?

Respuesta :

Answer:

$16,000

Explanation:

Given that,

Cost of investment in equity securities on December 31, 2017 = $510,000 and Fair value = $488,000

Fair value of the securities on December 31, 2018 = $504,000

Unrealized gain:

= Fair value of the securities on December 31, 2018 - Fair value of investment at December 31, 2017

= $504,000 - $488,000

= $16,000

Therefore, the Oriole should report unrealized gain of $16,000 on its 2018 income statement as a result of the increase in fair value of the investments in 2018.

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