Question
A firm (an investor) buys the stock of another company by paying $500 cash. Assume that the investor has only a passive interest. During the
A firm (an investor) buys the stock of another company by paying $500 cash. Assume that the investor has only a passive interest. During the year after the acquisition, the stock price rises to $550. Which of the below statements is correct? Select one: a. The firm will mark-to-market the investment through net income and recognize an unrealized gain of $50. b. The firm will mark-to-market the investment through AOCI and recognize an unrealized gain of $50. c. None of the listed answers. d. The firm will mark-to-market the investment through net income and recognize a realized gain of $50.
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