In January 2020, Haddock Ltd

question 82

Multiple Choice

In January 2020, Haddock Ltd. had purchased an investment for $ 150,000. By December 31, 2020, the fair market value of that investment had increased by $ 20,000. Assuming this gain was included in the company's 2020 net income, which accounting method did Haddock use to account for this investment?

• A) cost
• B) fair value through other comprehensive income (FV-OCI)
• C) fair value through net income (FV-NI)
• D) equity

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Definitions:

Vertical Summation

A method used to derive the market demand curve by adding the quantities demanded by all individuals at each price level, vertically.

Horizontal Summation

A method used to determine the total market demand or supply curve by adding individual demands or supplies at each price level, assuming they are compatible.

Public Good

A commodity or service that is provided without profit to all members of a society, either by the government or a private individual or organization.

Nonrival

A characteristic of certain goods where consumption by one individual does not reduce the amount available for consumption by others.