Question
During 2020, XYZ Corporation acquired 500 shares of XYZ stock at $30 per share. XYZ Corporation accounted for the stock as FVTOCI financial assets- Equity
During 2020, XYZ Corporation acquired 500 shares of XYZ stock at $30 per share. XYZ Corporation accounted for the stock as FVTOCI financial assets- Equity because XYZ made an irrevocable option to measure the equity investment through other comprehensive income.
All declines in market value are considered to be temporary. The market price per share of XYZ's stock as of December 31, 2020 and 2021, is $22.50 and $37.50, respectively. Given this information, the correct adjusting entry by XYZ at December 31, 2021, would include a credit to
a. Financial assets at FVTOCI-Equity of $3,750.
b. Unrealized holding Gain or Loss-other Comprehensive Income of $7,500.
c. Fair Value Adjustment-FVTOCI of $7,500.
d. Unrealized holding Gain or Loss-other Comprehensive Income of $3,750.
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