Data for debt investments classified as trading securities are presented in E16.10. Assume instead that the investments are classified as available-for-sale debt securities. They have the same cost and fair value as indicated in E16.10. The securities are considered to be a long-term investment.

Instructions
a. Prepare the adjusting entry at December 31, 2020, to report the securities at fair value.
b. Show the statement presentation at December 31, 2020, after adjustment to fair value.
c. E. Kretsinger, a member of the board of directors, does not understand the reporting of the unrealized gains or losses. Write a letter to Ms. Kretsinger explaining the reporting and the purposes that it serves.

E16.10

At December 31, 2020, the trading debt securities for Storrer, Inc. are as follows.

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Security Fair Value Cost $16,000 $17,500 A B 12,500 14,000 23,000 21,000 $53,000 $51,000