Ewok Enterprises Recently Elected the Fair Value Option to Account

question 156

Essay

Ewok Enterprises recently elected the fair value option to account for its investment in Yoda Inc. Ewok has significant influence over Yoda. Ewok purchased the shares for $210,000 and the shares are currently trading for $195,000 at year-end. Record the journal entries needed to purchase the investment, and then adjust it to fair value. Then, show how this investment will be reported on the balance sheet at year-end.

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Definitions:

Clock Speed

The speed at which a processor executes instructions, measured in cycles per second or hertz (Hz).

Optical Storage

A type of storage medium that uses lasers and lights to read and write data on discs like CDs, DVDs, and Blu-ray.

Flash Drive

A drive that plugs into a universal serial bus (USB) port on a computer and that stores data digitally. Also known as jump drive, USB drive, or thumb drive.

CPU Usage

The amount of processing power that a computer's central processing unit (CPU) is using at any given time, typically expressed as a percentage.