Practice prompt · Q:statement-presentation-comprehensive-income-and-disclosure/practice-afs-sale

Classify a security sale gain

Place a recognized security gain and related AOCI reclassification.

Updated Sep 13, 2026 Review due Dec 13, 2026

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A company sells an available-for-sale debt security. A holding gain from an earlier year is in accumulated OCI (AOCI), and the sale produces a recognized gain in the current year. Which treatment avoids leaving the old holding gain in AOCI after the sale?

Choose the best answer. a Report the sale gain only in current-period OCI and leave AOCI unchanged. b Report the sale gain as customer revenue because the security was sold for cash. c Report the recognized sale gain in net income and reclassify the related amount out of AOCI. d Report the sale gain in net income and leave the related prior holding amount in AOCI.

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Answer: c

The recognized sale gain enters net income, and the related prior holding amount is reclassified out of AOCI.