If Posthorn Corporation Accounts for Its Investment in Stamp Company

question 43

Multiple Choice

If Posthorn Corporation accounts for its investment in Stamp Company using the equity method, 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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