A debit balance in the account Market Adjustment - Available-for-Sale Securities at the end of the year should be interpreted as the net

A. unrealized holding gain for that year

B. realized holding gain for that year

C. unrealized holding gain to date

D. realized holding gain to date


I think it is A or C, but I am not really sure

Well, it is unrealized. A gain/loss is never realized until you actually get it (or lose it) by selling it.

As for this year only, or to date... Let's say you bought a security for $10,000. At the end of the year it is worth $11,000. So you would debit your market adjustment account and credit the unrealized gain.

At the end of a second year, the security is worth $12,500. The entry to make is to get the book value of this security up to $12,500. Prior to your entry the book value is $11,000. So your entry needs to consist of a $1500 debit to the market adjustment account and credit to the unrealized gain. The gain is the current year only of $1500. But how much is in the market adjustment account? Just that year's gain, or the whole thing to date?