This relates to the recognition principles for Unrealized Holding Gains and Losses (UHG/L). It depends on the classification of the investments, and the control available over the investment. If the Lodge has significant influence or control over the investee (e.g. owning over 20% of the voting stock of an outside business), the investments are recognized under the Equity Method or Consolidation, respectively. That doesn't sound like the case here, however. Assuming the Lodge owns less than 20% of the investee (e.g. if they are typical bonds or small amounts of stock in public companies), they are classified as Held to Maturity, Trading, or Available for Sale.
If they are classified as Trading securities (investments held in an active trading account), their balance sheet value is adjusted to the market price for each balance sheet date, and the change in value is recognized as other income. On your last reporting date the 100 shares of stock you held in a day trading account was valued at $20/share and today (new reporting date) it's valued at $21. That means you're $100 wealthier, and you recognize that gain as other income, and report a $100 increase in value on your balance sheet. That's all for GAAP purposes; you won't have to pay taxes on the gain since you haven't sold the shares yet, so you'll also recognize a Deferred Income Tax Liability of the amount of taxes you would have to pay if you had sold the shares.
DR $100 Investments
CR $60 Unrealized Gain on Trading Securities, Net of Taxes
CR $40 Deferred Income Tax Liability
(assuming a 40% tax rate)
If they're debt instruments and classified as Held to Maturity (investments the Lodge intends to keep until maturity and which they have the financial ability to hold to maturity...equity can't qualify since it has no "maturity"), you ignore changes in value, keeping the investment value at amortized cost until later, when they are actually sold/matured/closed. No gain or loss recognized, no entry required.
Finally, if they are classified as Available for Sale (all other investments), you still mark the value of the investments to market value on the balance sheet, but instead recognize the unrealized gain or loss in Other Comprehensive Income (after Net Income). The other side of the balance sheet entry would be to equity.
Note that all investments can irrevocably be classified as trading securities upon their purchase, so even securities that qualify for HTM treatment might be instead treated like trading securities except that cash effects would still appear under cash from investing activities (while typical trading security cash flows appear under operating cash flows) on the Cash Flow Statement.
Hope that helps.
