1.The fair value through net income model requires that

Group of answer choices

a.transaction costs are capitalized

b.transaction costs are expensed as incurred

c.equity investment gains and losses are included in other comprehensive income

d.investments remain at cost

2.

A physical count of XYZ Companys inventory showed it had finished goods inventory of $250,000. The following items were excluded from this amount:

Consignment inventory from ABC Company	$25,000
Goods in transit to a customer, FOB destination	$10,000
Goods in transit from one of XYZs suppliers, FOB shipping point	$12,000
Obsolete inventory that cannot be sold	$ 2,000

Based on this information, XYZ Company should show its ending inventory balance on the balance sheet at:

Group of answer choices

$272,000

$299,000

$275,000

$260,000

3.On its December 31, 2011, balance sheet, Merck Co. reported its fair value through net income investment in shares at $330,000. At December 31, 2012, the fair value of the securities was $350,000. What should Merck report on its 2012 income statement as a result of the increase in fair value of the investments in 2012?

Group of answer choices

Loss on investments of $10,000

Equity method income/loss debit of $10,000

$0

Unrealized loss of $20,000

Investment income / loss credit of $20,000