Assume That Chapman's Inc

question 178

Multiple Choice

Assume that Chapman's Inc.'s trading securities have a total cost of $185,000 and a total fair value of $215,000 at year end. The related adjusting entry would include a debit to

• A) Unrealized Gain for $30,000.
• B) Fair Value Adjustment - Trading for $30,000.
• C) No adjustment since only realized gains are recorded.
• D) Fair Value Adjustment - Trading for $215,000.

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Definitions:

Financial Accounting

The field of accounting focused on reporting financial information and transactions for decision makers outside the organization.

Tax Accounting

The area of accounting that deals with preparing tax returns and planning for future tax obligations.

Depletion

An accounting method used to allocate the cost of extracting natural resources over the period of their extraction.

Depreciation

A method of allocating the cost of a tangible asset over its useful life.