Use the Following Information for Questions 7 and 8

question 128

Multiple Choice

Use the following information for questions 7 and 8
Rushia Company has an available-for-sale investment in the 10%, 10-year bonds of Pear Company The investment's carrying value is $3,200,000 at December 31, 2014. On January 9, 2015, Rushia learns that Pear Company has lost its primary manufacturing facility in an uninsured fire. As a result, Rushia determines that the investment is impaired and now has a fair value of $2,300,000. In June, 2016, Pear Company has succeeded in rebuilding its manufacturing facility, and its prospects have improved as a result.
-If Rushia Company determines that the fair value of the investment is now $3,900,000 and is using U.S. GAAP for its external financial reporting, which of the following is true?

• A) Rushia is prohibited from recording the recovery in value of the impaired investment.
• B) Rushia may record a recovery of $900,000.
• C) Rushia may record a recovery of $700,000.
• D) Rushia may record a recovery of $1,600,000.

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Definitions:

Respiratory System

The network of organs and tissues involved in the process of breathing, facilitating the exchange of oxygen and carbon dioxide between the organism and its environment.

Thoracic Cavity

An anatomical chamber of the human body that is bounded by the rib cage and diaphragm, housing the lungs and heart.

Collagen Fibers

Strong, flexible protein fibers that are a major component of connective tissue, providing structure and support to skin, bones, and tissues.

Connective Tissue

Tissue that supports, connects, or separates different types of tissues and organs in the body.