I don't understand this at all.
Sun Corp. had investments in marketable debt securities costing $650,000 that were classified as available-for sale. On June 30, 20X3, Sun decided to hold the investments to maturity and accordingly reclassified them to the held-to-maturity category on that date. The investments’ market value was $575,000 at December 31, 20X2, $530,000 at June 30, 20X3, and $490,000 at December 31, 20X3. Sun does not elect the fair value option to account for these investments.
What amount should Sun report as net unrealized loss on marketable debt securities in its 20X3 statement of stockholders’ equity?
The answer is 120, the 650 cost subtracted from the 530 at the time of the reclass from AFS to HTM. Why is the entire amount of 650 being taken as unrealized in X3? At Dec 31 wouldnt the security have been carried at $575 on Dec 31 X2 with that loss going to OCI? And from there in X3 the difference between the new carrying amount of 575 and the 530 at the date of the reclass be what goes to OCI in X3? Why are we using the…wait I think I just answered my own question. Are we looking at the 120 because when we look at the statement of SE we are looking at the cumulative amount? So the 75 loss in X2 and the 45 loss in X3 would show up as one cumulative number on the balance sheet in SE…which is why the answer is 120 in X3?
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