3. Topic: Impairment testing of investments Impairment testing requires a comparison of an assets book value with its fair value, with impairment losses reported on the income statement. Which of the following investments are NOT tested for impairment?

a. Equity securities carried at fair value b. Held-to-maturity investments c. Equity method investments d. Joint ventures

4. Topic: Motivations for intercorporate investments P Company owns 40% of S Company. What is the most likely reason P made this investment?

a. Earn a return on temporarily idle cash. b. Speculate based on private information that the stock price will increase. c. Balance a risk-adjusted portfolio with the expectation of dividends and capital gains. d. Facilitate activity along the supply chain.

**Please provide explanation and any calculations. Thank you!