Asked by Santosh Poudel on Jun 20, 2024
Verified
The market value of the Lite stock investment at the end of 2015 was $210,000.Which of the following amounts are correct assuming that Como elected to use the fair value option to account for the Lite investment? 
A) Option A
B) Option B
C) Option C
D) Option D
Market Value
The current price at which an asset or service can be bought or sold in the marketplace.
Fair Value Option
The Fair Value Option is an accounting option that allows companies to measure selected financial assets and liabilities at fair value, aiming to provide more relevant financial information.
- Discuss the ramifications of opting for the fair value option in the accounting of equity method investments and the prerequisites for the impairment of goodwill.
Verified Answer
SP
stephanie petithommeJun 21, 2024
Final Answer :
A
Explanation :
$28,000 = $10,000 {unrealized gain: $210,000(fair value)- $200,000 (original cost)+ $18,000 (dividend income: $40,000 × 45%)} $210,000 = fair value
Learning Objectives
- Discuss the ramifications of opting for the fair value option in the accounting of equity method investments and the prerequisites for the impairment of goodwill.