Question
Blat Blot Ltd. purchases 1 share of Banana Co. for $200 on February 20th, Year 2. As at December 31, Year 2, that share of
Blat Blot Ltd. purchases 1 share of Banana Co. for $200 on February 20th, Year 2. As at December 31, Year 2, that share of Banana Co. is now valued at $300. On January 15th, Year 3, Blat Blot Ltd. sells the Banana Co. share for $420. Blat Blot Ltd.s year end is December 31. The company uses the fair value through profit or loss method to account for this investment. The January 15th, Year 3 journal entry would include the following:
Select one:
a.
A credit to unrealized gains for $100
b.
A credit to realized gains for $120
c.
A credit to unrealized gains for $120
d.
A credit to realized gains for $220
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