As a long-term investment at the beginning of the 2018 fiscal year, Florists International purchased 30% of Nursery Supplies Inc.s 8 million shares for $56 million. The fair value and book value of the shares were the same at that time. The company realizes that this investment typically would be accounted for under the equity method, but instead chooses the fair value option. During the year, Nursery Supplies earned net income of $40 million and distributed cash dividends of $1.25 per share. At the end of the year, the fair value of the shares is $52 million. 29). Indicate the effect of this investment on 2018 income before taxes. Which of the following is true ?

A.Unrealized holding loss 4 Fair Value Adjustment..................................................4

B.Unrealized holding loss 4 Investment in Nursery Supplies....................................4

C.Unrealized holding loss-OCI 4 Fair Value Adjustment..................................................4

D. Equity method, even though recorded at fair value option, doesnt require to reflect the fair market value changes of investment at the year end.