[hotboy20102008]

what's the journal entry for fair value gain for example:
long-term available-for-sale securities $42,000 (fair value $45,000)

I was thinking:
DR. long-term available-for-sale securities 3000
CR. Gain on Investment 3000

if this is right what type of account is gain on investment (asset, liability, owners equity and what's its normal balance)

[ArcSine]

If you're in a situation where you want to write-up / write-down unrealized FMV movements in your securities or other assets, then your proposed JE will get the job done. As an alternative, I've seen securities firms leave the securities in one account at their original cost ($42K, in your example), and then book any "mark-to-market" price movements in a related asset account. With that approach your balance sheet would have the 45K FMV of the "written up" securities represented by two asset accounts:

Securities: Original Cost 42,000
Unrealized Appreciation / Depreciaton: 3,000

As to the Gain side of your JE, it'll land on the P&L, but you'll want it to be clearly segregated into its own bucket; something like "Unrealized Gains and Losses on Securities", or some such descriptive name. That distinction is important for tax reasons, as well as for financial reporting purposes.

Beyond this simplistic approach, there might be some GAAP issues that you'll have to address. That's not my arena, but there are a couple of advisors on here who've really got the goods when it comes to accounting, so I'll defer to their judgment.

Best of luck with it.

[morgaine300]

Almost all there... but for Available-for-Sale securities, the unrealized gain or loss is not on the income statement, but rather an equity account.

For trading securities, the unrealized gain or loss would be an income statement account.