Fair value accoun$6$ng for minority$-$passive equity investments

Founded on January $2,2021,$ Garvis, Inc. had the following passive investments in

equity securi$($es at the end of $2021$ and $2022$:

Equity Security Cost Fair Value, $12/21/2022$

A $$96,000$ $$94,000$

B $184,000162,000$

C $126,000136,000$

Required:

If the company recorded a $$4,000$ debit to its fair value adjustment account as its

$2022$ fair value adjustment, what must have been the unrealized gain or loss

reported at the end of $2021?$

SOLUTION:

Equity Security Cost

Fair Value,

$12/21/2022$

Unrealized

Gain$/($Loss$)$

A $$96,000$ $$94,000$

B $184,000162,000$

C $126,000136,000$

Fair Value Adjustment $$ trading securi$6$es

X $12/31/21$ balance

Change in $2022$ due to fair

value adjustment

$12/31/22$ balance