Question #63

Reading: Reading 8 Intercorporate Investments

PDF File: Reading 8 Intercorporate Investments.pdf

Page: 27

Status: Unattempted

Part of Context Group: Q63-65 First in Group
Shared Context
- What is the investment income that Zeisler Company will report for the year 2009 on its investment in Market Square Corporation shares if it continues to account for the shares as an FVOCI investment? A) $150,000. B) $200,000. C) $250,000.
Question
If Zeisler were to account for the Market Square Corporation shares as FVPL, assuming that the securities do not change in value between the December 15th meeting and the end of the year, the carrying amount of these shares on Zeisler's December 31, 2009 balance sheet would be:
Answer Choices:
A. $2.50 million
B. $2.75 million
C. $3.50 million
Explanation
Regardless of the FVOCI or FVPL classification, securities are carried at fair market value: 100,000 shares × $35 per share = $3,500,000.
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