Use the Following Information for Questions 7 and 8

question 117

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 $2,900,000 and is using IFRS 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 $600,000.
• C) Rushia may record a recovery of $900,000.
• D) Rushia may record a recovery, but is limited to 80% of the value of the recovery.

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Definitions:

Unconditioned Compensatory Responses

Innate responses or reactions that occur as a direct result of a stimulus, not requiring prior learning or conditioning.

Placebo Effect

The phenomenon in which patients experience a perceived improvement in condition solely due to the belief that they are receiving treatment.

Withdrawal

Symptoms that occur upon the reduction or cessation of intake of a substance that one has become dependent on.

Classical Conditioning

A learning process that occurs through associations between an environmental stimulus and a naturally occurring stimulus, leading to learned responses.