E16-11 Data for investments in stock classified as trading securities are presented in E16-10. Assume instead that the investments are classified as available-for-sale securities. They have the same cost and fair value. The securities are considered to be a long-term investment.

At December 31, 2017, the trading securities for Storrer, Inc. are as follows.

Security

A B C

Cost

$17,500 12,500 23,000

$53,000

Fair Value

$16,000 14,000 21,000

$51,000

Instructions

(a) Prepare the adjusting entry at December 31, 2017, to report the securities at fair value. (b) Show the statement presentation at December 31, 2017, 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.