On February 8^th, 2020, Harris Pilton purchased 3,000 shares of Pizza Gnomes Inc. for $30 per share. Pizza Gnomes has 100,000 shares outstanding. On December 1, Pizza Gnomes declared and paid an $0.30 cash dividend per share. The market price of Pizza Gnomes stock is $25 per share on December 31, and the unrealized holding gain/loss account for Harris Pilton's accounting purposes has a beginning debit balance of $600.

Instructions

(1)Compute the carrying value of the investment at December 31, 2020.

(2)Briefly explain how this investment should be accounted for and how this would differ if Harris Pilton had instead purchased 30,000 shares.

(3)Compute the fair value adjustment of this investment assuming the market price at December 31 was instead $35.