|Posted: 19 Mar 2009 at 20:40 | IP Logged
For trading securities, the realized gain or loss reported when the security is sold is the difference between the adjusted cost (original cost+/- unrealized gains/losses previously recognized on the income statement) and the selling price.
So, we are adjusting the valuation account (contra account) during calculation of the realized gain/loss !
Trading security - cost - means the adjusted cost !
Remember, we have already recognized the unrealized gain/loss on trading securities in the income statement...
Hope this helps !
Divya - CO State
Passed using Becker Review :
FAR - 04/11/09 - 94
BEC - 05/30/09 - 86
REG - 08/29/09 - 95
AUD - 11/21/09 - 92
Ethics - 2011