Available$-$for$-$sale securities; adjustment to fair value

During its first year of operations, Giovani Foods purchased available$-$for$-$sale securities for $$37,500.$ Giovani Foods expects it will sell the securities within the next year. At the end of the year, these securities had a market value of $$33,900.$

Assume that Giovani Foods did not purchase or sell any available$-$for$-$sale securities during its second year of operations. At the end of the second year, the market value of the available$-$for$-$sale securities is $$40,000.$

a$.$ What would be the amount of the adjustment to fair value for the available$-$for$-$sale securities$?$

$

b$.$ After the adjustment is posted to the accounts, what is the balance of the valuation allowance for availablefor$-$sale securities account?

c$.$ How would the increase in the fair value of the securities in the second year be reported on Giovani Foods' financial statements?

The available$-$for$-$sale securities would be reported as : on the balance sheet. The unrealized gain on available$-$for$-$sale securities would be reported as an addition to on the balance sheet.