Fisher Corporation Has the Following Investments at September 30, 2020

question 60

Multiple Choice

Fisher Corporation has the following investments at September 30, 2020: $\begin{array}{|l|r|r|r} \hline & \text { Historical cost } & \begin{array}{r}\text { Fair value } \\\text { Sept 30, 2019 }\end{array} & \begin{array}{r}\text { Fair value } \\\text { Sept 30, 2020 }\end{array} \\\hline \text { Shares of ABC } & \$ 25,000 & \$ 15,000 & \$ 25,000 \\\hline \text { Bonds of Brooke } & 10,000 & 12,000 & 11,000 \\\hline \text { Shares of CooksTown } & 12,000 & 18,000 & 16,000 \\\hline \text { Shares of Davenport } & 18,000 & 20,000 & 19,000\\\hline \end{array}$
What method of accounting will Fisher use to account for its investment in Brooke, if the intent of the business model is to hold the investment for the purpose of collecting contractual cash flows of principal and interest?

• A)Amortized cost.
• B)Equity method.
• C)Fair value through other comprehensive income.
• D)Fair value through profit or loss.

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Definitions:

Conservation

In environmental science, the preservation, protection, or restoration of the natural environment and wildlife; in cognitive development, a term introduced by Piaget referring to the understanding that certain properties of objects remain the same despite changes in their form or appearance.

Egocentrism

A cognitive trait where an individual has difficulty understanding or assuming any perspective other than their own.

Assimilation

The cognitive process by which new information is integrated into existing schemas or frameworks, helping individuals to understand and interact with the world around them.

Sensorimotor

Refers to the stage in early childhood development where learning occurs through sensory experiences and manipulating objects.