If Posthorn Corporation Accounts for Its Investment in Stamp Company

question 42

Multiple Choice

If Posthorn Corporation accounts for its investment in Stamp Company at fair value through profit or loss, what entry will the company make to record the revaluation of the investment at December 31, 2016?

• A)
• \[\begin{array} { | l | l | l | }
• \hline & \text { Debit } & \text { Credit } \\
• \hline \text { Investment in Stamp Company } & \$ 20,000 & \\
• \hline \text { Unrealized gain (net inc ome) } & & \$ 20,000 \\
• \hline
• \end{array}\]
• B)
• \[\begin{array} { | l | l | l | }
• \hline & \text { Debit } & \text { Credit } \\
• \hline \text { Investment in Stamp Company } & \$ 20,000 & \\
• \hline \text { Unrealized gain } ( 0 \mathrm { Cl } ) & & \$ 20,000 \\
• \hline
• \end{array}\]
• C)
• \[\begin{array} { | l | l | l | }
• \hline & \text { Debit } & \text { Credit } \\
• \hline \text { Unrealized loss (net income) } & \$ 20,000 & \\
• \hline \text { Investment in Stamp Company } & & \$ 20,000 \\
• \hline
• \end{array}\]
• D)No entry requireD.

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