Fair Value Method through Net Income

At December 31, 2020, Bard Heating Supplies held 17,500 common shares of Reddick Radiators that represented an ownership interest of 8%. Bard reported the investment in Reddick Radiators as:

	12/31/2020
Investment in Reddick Radiators @ Historic Cost	$488,250
Fair Value Adjustment Allowance	63,000
Investment in Reddick Radiators @ Fair Value	$551,250

Bard Heating Supplies held the investment in Reddick Radiators throughout 2021 and intends to continue holding the shares in 2022 and beyond.

Bard Heating Supplies is unable to gain Board representation or influence in any way the operating and financial decisions of Reddick Radiators from its ownership interest.

Fair Value Method through Net Income #1

Bard Heating Supplies received 1,750 additional shares on March 15, 2021 as a 10% stock dividend declared and distributed by Reddick Radiators at a time when the shares had a fair market value of $30.00 per share.

Select the three answers below that correctly describe the treatment of stock dividend by Bard Heating Supplies.

Check All That Apply

• Recognize no revenue

• Recognize Stock Dividend Revenue of $1,750

• Recognize Stock Dividend Revenue of $52,500

• Do not change the number of Reddick Radiators shares held

• Increase the number of Reddick Radiators shares held to 19,250 shares

• Decrease the number of Reddick Radiators shares held to 15,750 shares

• Do not change the cost basis per share of the investment in Reddick Radiators

• Change the cost basis per share of the investment in Reddick Radiators to $25.364

• Change the cost basis per share of the investment in Reddick Radiators to $28.091