hard · Financial Accounting accounting-cycle-financial-statements
During 2026, Zenith Co. recognized an unrealized gain of $100,000 on its Available-for-Sale (AFS) debt securities. The firm's effective tax rate is 25%.
In the financial statements, how is the tax effect of this gain presented?
- As a $25,000 reduction in Other Comprehensive Income (OCI).
- As a $25,000 reduction in the Net Operating Loss carryforward.
- It is not recognized because the gain is unrealized.
- As a $25,000 increase in Income Tax Expense on the Income Statement.
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