[siddkid]

***Can anyone explain the Allowance account in the question? Thanks***

Information regarding Stone Co.’s portfolio of marketable equity securities is as follows:
Aggregate cost as of 12/31/X2 $170,000
Unrealized gains as of 12/31/X2 $4,000
Unrealized losses as of 12/31/X2 $26,000
Net realized gains during 20X2 $30,000

At December 31, 20X1, Stone reported an allowance of $1,500 to reduce investments to market. In its December 31, 20X2, balance sheet, what amount of allowance should Stone report?

$20,500

$0

$26,000

$22,000

[fsugirl2005]

Not sure what study program you're using but the allowance account is another way of saying Unrealized Holding Gain or Unrealized Holding Loss. Those are accounts used to adjust securities up or down. These are part of OCI.

AUD - 10/21/16 (75----07/2010 expired)
FAR - 10/28/16
BEC - 11/2016
REG - 01/2017

Using Gleim CPA Review, Ninja Audio, Ninja Book

[Author]

Replies