Apple Inc. accumulates large amounts of excess cash throughout the year. It typically invests these funds in marketable securities until they are needed. The companys most recent financial statements revealed a nearly $160 million unrealized gain on short-term investments. Footnotes to the financial statements disclosed that Apple Inc. reports its short-term investments at fair value.

a. Explain the meaning of the companys unrealized gain on short-term investments.

b. How does the unrealized gain impact the companys financial statements?

c. Is the unrealized gain included in the computation of the companys taxable income? Explain.

d. Evaluate fair value accounting from the perspective of the companys creditors.