4. On December 31, 2019, Acme reported Investments in Stock - cost $180,000. The fair value of the securities on this date is $200,000. Using fair value accounting, what would be the proper adjustment to reflect the change in fair market value of Acme's investments? a) A $20,000 debit to the Fair Value Adjustment Account b) Unrealized gain of $20,000 - Equity c) Realized gain of $20,000 d) A $20,000 debit to Unrealized Gain on Investments 5. If a company is using the Fair Value Method of Accounting for Investments in Stock, which of the following gains and losses should they include in the company's Income Statement? a) Only unrealized gains and realized losses b) Only realized gains and realized losses. c) All recognized gains and unrealized losses. d) All unrealized losses and unrealized gains In 2019, Parent Company invested $8,500,000 in Subsidiary Company representing a 30% interest in Subsidiary Company's common stock. During the year, Subsidiary Company reports income of $700,000 and pays dividends of $50,000. The market value of Subsidiary Company at year-end is $8,275,000. Parent Company has no other investments in common stock. What effect would these transactions have on Parent Company's account - Investment in Common Stock - Subsidiary Company? (Parent Company use the Equity Method of accounting for this transaction) a) The net balance in the account would decrease by $195,000 b) The balance in the account would increase by $195,000. c) The balance would increase by $210,000. d) The net balance would decrease by $225,000. On July 1, 2019, Techno Inc. purchased invested $500,000 face value PJ Morgan's 4% bonds due on July 1, 2029. The bonds pay interest semi- annually on January 1 and July 1. The bonds were purchased at a discount for $450,000 and provide a yield of 5%. Determine the total amount of interest revenue that Techno should report on its December 31, 2019 income statement a) $20,000 b) $18,000 c) $22,500 d) $11,250 4. On December 31, 2019, Acme reported Investments in Stock - cost $180,000. The fair value of the securities on this date is $200,000. Using fair value accounting, what would be the proper adjustment to reflect the change in fair market value of Acme's investments? a) A $20,000 debit to the Fair Value Adjustment Account b) Unrealized gain of $20,000 - Equity c) Realized gain of $20,000 d) A $20,000 debit to Unrealized Gain on Investments 5. If a company is using the Fair Value Method of Accounting for Investments in Stock, which of the following gains and losses should they include in the company's Income Statement? a) Only unrealized gains and realized losses b) Only realized gains and realized losses. c) All recognized gains and unrealized losses. d) All unrealized losses and unrealized gains In 2019, Parent Company invested $8,500,000 in Subsidiary Company representing a 30% interest in Subsidiary Company's common stock. During the year, Subsidiary Company reports income of $700,000 and pays dividends of $50,000. The market value of Subsidiary Company at year-end is $8,275,000. Parent Company has no other investments in common stock. What effect would these transactions have on Parent Company's account - Investment in Common Stock - Subsidiary Company? (Parent Company use the Equity Method of accounting for this transaction) a) The net balance in the account would decrease by $195,000 b) The balance in the account would increase by $195,000. c) The balance would increase by $210,000. d) The net balance would decrease by $225,000. On July 1, 2019, Techno Inc. purchased invested $500,000 face value PJ Morgan's 4% bonds due on July 1, 2029. The bonds pay interest semi- annually on January 1 and July 1. The bonds were purchased at a discount for $450,000 and provide a yield of 5%. Determine the total amount of interest revenue that Techno should report on its December 31, 2019 income statement a) $20,000 b) $18,000 c) $22,500 d) $11,250