[ITSTIMETOPASS]

So for the cost method for marketable securities, to adjust to the FMV of the securities we need to make J/E.

Unrealized Loss:
Dr. Unrealized Loss
Cr. Investment in Investee

Unrealized Gain:
Dr. Investment in Investee
Cr. Unrealized Gain

I learn by understanding things in the simplest terms. Why is the loss a debit and a gain a credit? J/E were never my strong suit.

AUD: PASSED!
REG: Q4 2015
FAR:
BEC:

[Jakecpa]

For the cost method, unrealized gains and losses hit the income statement right away. The loss will be debited like an expense, a gain will be credited like you credit revenue.
For the equity method, unrealized losses hit Other comprehensive income, not the income statement. In the equity method Losses reduce Other comprehensive income —- Other comprehensive income is an equity account that increases with a credit so a loss will be debited to other comprehensive income. A gain will increase other comprehensive income with a credit.

[Jakecpa]

My mistake, I typed so fast, for Trading securities unrealized gains and losses hit the income statement.
For available for sale securities, unrealized gains and losses hit Other comprehensive income.
Correction.

[vodrldnr]

are you asking “why loss is debit and gain is credit” ?????

for the trading securities, the unrealized gain and loss (= the holding gain and loss) is reported on income statement.

[Author]

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