Nola Co. has a portfolio of marketable equity securities which it does not intend to sell in the near term. How should Nola classify these securities， and how should it report unrealized gains and losses from these securities？
Classify as Report as a
a. Available-for-sale securities Component of income from continuing operations
b. Trading securities Component of income from continuing operations
c. Trading securities Component of other comprehensive income
d. Available-for-sale securities Component of other comprehensive income
Explanation
Choice “d” is correct. Investments in marketable equity securities which the company does not intend to sell in the near term should be classified as available-for-sale. Unrealized gains and losses on available-for-sale securities should be reported as a separate component of other comprehensive income.
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