Libby Company purchased equity securities for $120,000 and classified them as available-for-sale securities. At the end of the year, the fair value of the securities was $125,000. How should the investment be reported in the year-end financial statements?
The investment in available-for-sale securities would be reported in the balance sheet at its $120,000 cost.
The investment in available-for sale securities would be reported in the balance sheet at its $125,000 market value.
The investment in available-for-sale securities would be reported in the balance sheet at its $125,000 market value and an unrealized holding gain would be reported in other comprehensive income.
An unrealized holding gain would be reported in other comprehensive income.