On May 15, 2020, Croissant Corp

question 36

Multiple Choice

On May 15, 2020, Croissant Corp. purchased 1,000 common shares of Holter Inc. for $ 24,000, as a Fair Value through Net Income (FV-NI) equity investment. At December 31, 2020, the fair value of these shares was $ 23,100. The required adjusting entry to reflect this fact is

• A) debit Fair value-Net Income Investment, credit Holding Gain on Investment (OCI) $ 23,100.
• B) debit Holding Gain on Investment (OCI), credit Fair value-Net Income Investment $ 23,100.
• C) debit Fair value-Net Income Investment, credit Investment Income $ 15,900.
• D) debit Investment Loss, credit Fair value-Net Income Investment $ 900.

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Definitions:

Just-In-Time

A production and inventory strategy where materials and products are delivered or manufactured just in time for use or sale, reducing storage costs.

Market Share

The segment of a market held by a certain company or product.

Concentration Ratio

A measure used to assess the market share controlled by the top firms in an industry, indicative of market competitiveness or dominance.

Inverted-U Theory

A hypothesis that suggests a relationship between a particular factor and an outcome starts positively at lower levels, peaks, and then turns negative as the factor increases further.