In January 2011, Colt Co

question 17

Multiple Choice

In January 2011, Colt Co.had purchased an investment for $100,000.By December 31 2011 the market value of that investment had increased by $10,000.Assuming this gain was NOT included in the company's 2011 net income, which accounting model did Colt use to account for this investment?

• A)The cost model
• B)The fair value through net income model
• C)The fair value through OCI model
• D)None of these

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Definitions:

Marginal Tax

The additional tax paid on an additional dollar of income, used in progressive tax systems to tax higher incomes at higher rates.

Proportional

A relationship or ratio between two quantities where they change at the same rate.

Tax Rate

The proportion of income that a person or business must pay in taxes.

Digressive

Characteristics of a process or system that decreases in intensity or rate as it progresses.