A Company Failed to Record Unrealized Gains of $20 Million

question 85

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.Unrealized gains on securities available for sale are reported net of tax in other comprehensive income.

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Definitions:

Operant Conditioning

A learning process by which the strength of a behavior is modified by reinforcement or punishment.

Unconditioned Response

A natural, automatic reaction to a stimulus that occurs without any need for prior learning or conditioning.

Conditioned Response

is a learned reaction to a previously neutral stimulus that has become associated with an unconditioned stimulus through conditioning.

Pavlov

A Russian physiologist best known for his work in classical conditioning, particularly the concept of the conditioned reflex using dogs.