A Company Failed to Record Unrealized Gains of $20 Million

question 22

Multiple Choice

A company failed to record unrealized gains of $20 million on its available for sale security investments.Its tax rate is 30%.As a result of this error,comprehensive income would be:

• A)Understated by $14 million.
• B)Understated by $6 million.
• C)Understated by $20 million
• D)Unaffected.

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Definitions:

Normal Good

A product that sees an increase in demand as people's incomes increase, and a decrease in demand when their incomes decrease.

Housing

Refers to the provision and availability of homes and buildings for habitation by individuals and families.

Utility

A measure of satisfaction or happiness that a consumer derives from the consumption of goods and services.

Consumption Bundle

A mix of products and services selected by a consumer for use at a specific moment.